This presentation of the main ideas and concepts of game theory required to understand the discussion in this book is intended for readers without previous exposure to game theory.

A game-theoretic analysis starts by specifying the rules of the game. These rules identify the decision makers (the players), their possible actions, the information available to them, the probability distributions over chance events, and each decision maker's preference over outcomes –specifically, the set of all possible combinations of actions by the players. A game is represented, or defined, by the triplet of the players' set, the action set (which specifies each player's actions), and the payoff set (which specifies each player's payoffs as a function of the actions taken by the players). The rules of the game are assumed to be common knowledge. The situations considered are strategic in the sense that each player's optimal strategy depends on the actions of other players. (Nonstrategic situations constitute a special case.)

The objective of game-theoretic analysis is to predict behavior in strategic situations – to predict an action combination (an action to each player) for any given rules of the game. The difficulty of finding such solutions stems from the fact that because the action optimal for each player depends on others' actions, no player can choose his optimal action independently of what other players do.