Multicultural Education Volume 7, Issue 6, 2021 _______________________________________________________________________________________ 40 Game Theory and Stock Investment Mahboob Ullah, Ghulam Rasool Lakhan, Amanullah Channa, Shabnam Gul ArticleInfo Abstract Article History The aim of this study is to provide an understanding regarding the investor’s situation of loss-aversion and stress during investment decisions in stock market, and the use of various mathematical models (game theories) to eliminate those situations. The objectives of this study are to know about the irrationalities in investor’s behavior in stock market, due to stress and loss-averse behavior of investors, and find-out the ways to deal with these behaviors. Qualitative research style used to gather data from the participants of the study. Semi-structured interviews designed to know about the experience and thoughts of each respondent in detail. A sample of 16 experienced stock marketers from Pakistan and USA selected for this study. The study found the specific kind of tensed and biased investor’s behaviors in the market, and found their solutions. This study obviously highpoints the ways to deal with stress and loss-averse behavior through mathematical analysis and some other suggestions. Received: February 24,2021 Accepted: April 30, 2021 Keywords : Game Theory, Loss- aversion, Stress, Stock‘s Investment. DOI: 10.5281/zenodo.4900016 1. Introduction Meanwhile the advent of the issue of market abnormality and investor‘s stress, substantial academic efforts have been established to know the influence of game theory practices towards normal movements of the stock market and relaxed investment by the investors. Studies find various types of game theory practices and their influence on market returns. Supporters of game theory propose that game theory practices creates positive relationship with investor‘s success and market‘s optimal return ( Auer & Hiller, 2019; Khan, Khan, Ullah, Usman, & Farhat, 2020). In difference, studies backing the negative influence of game theory on investor‘s decision in the market. In precise, they contend that the results of game theory may most of the time confuse the investor as most of the time investors are financially illiterate (Gui, Huang, & Zhao, 2019), and analysis of game theory results may generate disproportionally high cost (Ullah, Shaikh, Channar, & Shaikh, 2021; Yilmaz, Aksoy, & Tatoglu, 2020). Game theory, there are various techniques of mathematical objectives and of different character that is either payoff matrix or attendant mathematical behaviors. Each technique is of its own kind i.e. to solve some general problem, the possible strategies between two players/individuals, etc. (Nisan, Roughgarden, Tardos, & Vazirani, 2007). Game theoretic solutions entails concept of change in payoff level (Battigalli, Corrao, & Sanna, 2020; Driessen & Tijs, 1984). In case of adding a constant to all payoffs, then it will shake the performance of all players and their preferences also, these preferences could be in term of gain and loss. The key point to note is that how the reward amount can effect am individual behavioral preferences. Many researchers (Baker, Laury, S. K., & Williams, 2008; Feltovich, 2011; Feltovich, Iwasaki, & Oda, 2006; Gueye, Querou, & Soubeyran, 2020; Ho, Osiyevskyy, Agarwal, & Reza, 2020) have conducted varieties of studies to explore the effect of payoff- rates on individual decisions and behaviors, that if both benefit and loss are possible, then why individual prefer either loss or gain. There are several ways to investigate the effect of payoff rates on individual decision, such business trials, mixed strategies, and Nash equilibrium. Some scholars have also used management games with Pareto-ranked Nash equilibrium to study the effect of change in payoff level. Cachon and Camerer (1996) concluded that payoff level changes in a multiplayer median- effort game by adjusting the mandatory sunk cost, and he concluded that subjects behaves differently when such acts lead to predetermined losses which are compared to the bottom line or above all yields, this is known as ―loss prevention‖. Loss prevention is the name set to the activities that help provide preventive safety measures for the prevention of losses. Rydval (2005) examined the profit and loss pattern in stag-hunt games, which designed a strategy where one member of each pair differs from other by a constant. Study found consistent behavior with loss prevention except of one pair among four. In addition, Feltovich, Iwasaki, and Oda (2008) suggested a distinction between the terms ―certain loss prevention (used by various researchers)‖ and ―possible-loss