Game theory is a branch of mathematics that studies how people make decisions in situations where their choices affect one another. It helps to analyze competitive situations, like in economics or politics, where individuals or groups must consider the actions of others when making their own choices. For example, businesses often use game theory to strategize pricing and marketing, anticipating how competitors will respond. One famous example in game theory is the Prisoner's Dilemma, where two individuals must decide whether to cooperate or betray each other. The outcome depends on their choices, illustrating how rational decisions can lead to unexpected results. This concept is widely applied in various fields, including psychology, sociology, and biology.