Caro Article

[HatesLosing]

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Game theory shows the optimal play against an optimal opponent. That's not always the play that makes the most money against a complete idiot.

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Classic problems in game theory often like to treat the problem of what the optimal strategy is when facing an opponent playing optimally. This is only a small subset of game theory though.

Game theory deals with the optimal strategy for any game, whether players are playing sub-optimal or not. We often use the concept of "bounded rationality" (Google it), but this is not the only concept that is used.

Actually, "Bounded Rationality: The Adaptive Toolbox" by Gigerenzer and Selten, as well as "Modeling Bounded Rationality" by Rubenstein are good references on this topic.