Itaú Blog

The Fed's Decisions and Game Theory

The Weekly Globe: game theory is currently a necessary tool for the business and investment world

Marcelo Aagesen, Head of Global Markets and Strategy

• 2 minutos de leitura

Crédito: Getty Images/Itaú Private Bank

A novice poker player looks at their cards and tries to gauge the strength of their hand. That is considered level 1 thinking. In level 2, the player thinks about what their opponent may have. Level 3 is reserved for good players: "what does my opponent think I have?". Highly-skilled players design their strategies based on level 4: "what does my opponent think that I think they have?".

Game theory — a mathematical concept applied to strategies in competitive situations where the result of a decision is interdependent on the actions of other players — is currently a necessary tool for the business and investment world.

Read the full article.