132 Revista Tinerilor Economiti IMPLICATION OF GAME THEORY TO INTERNATIONAL TRADE Assoc. Prof. Ph.D. Dobre I. Claudia, „Ovidius” University of Constanta Faculty of Economical Science Constanta, Romania Abstract: Game Theory is a general mathematical analysis to investigate the strategic interactions among players. Game theorists attempt to provide precise descriptions of situations of conflicting interests in order to study the behavior that such a conflict would (or, in some cases, should) elicit from rational agents. Players are assumed to consider the position and perceptions of other players while forming their strategies. In our examples, we will assume that there are two players, and that each has two choices and the fact that the players are selfish (operate in their own best interests) and rational (choose the best options available). First, I outline some basic concepts of game theory and, in the next section, I give some examples regarding the application of game theory to international trade (cartel, free trade & protection and trade policies). Key words: Game Theory, cartel, trade policies Introduction Game theory is as old as social theory. It found application in the study of human behavior among the so-called contract theorists Thomas Hobbes (1588-1679), John Locke (1632-1704) and Jean-Jacques Rousseau (1712-1778) as they discussed the rationale behind individuals drawing up a "social contract." And it has seen use among a variety of writers attempting to analyze successful gambling strategies. More formally, we can think of game theory as the systematic study of the relationship between rules, choice and outcome in competitive situations. Two main branches exist. Analytical game theory is the analysis of games played by non-empirical players; that is "ideal" players who may be endowed with any characteristics, which can be modeled. These players need not accurately correspond to real-world people and such work is only open to critique to the extent that the math involved is wrong. They are experiments in logic, not models of the real world. On the other hand, behavioral game theory is the study of actual human players as they are confronted with precisely defined games. In this branch, researchers study how people make choices and navigate social conflicts. The birth of game theory in its modern form is commonly said to be the publication of Johan Von Neumann and Oskar Morgenstern's Theory of Games and Economic Behavior in 1944. The ideas put forth in this volume relied on complex mathematics with the ambitious goal of providing a solid scientific foundation for the discipline of economics. This work was expanded upon in the years to follow, reaching political science in the late 1960s and evolutionary biology in the early 1970s.