Avinash Dixit and Barry Nalebuff are professors of economics at Princeton and Yale respectively. They specialize in Game Theory. In 1991 they co-authored a best seller called Thinking Strategically and their second book The Art of Strategy: A Game Theorist Guide to Success in Business and Life is an extension of the previous.

Dixit and Nalebuff defines game theory as

Rigorous strategic thinking, the art of anticipating your opponents next moves, knowing full well that your rival is trying to do the same to you

The Prisoner’s Dilemma

The most famous instance of game theory is the prisoner’s dilemma where two prisoners are kept captive in isolation. The police does not have enough evidence to convict, and would require the cooperation of at least one prisoner. If both confess, they would end up with a standard sentence, say 2 years in prison. If both refuse to admit to the crime, ...