evolutionary biology, political science, and military strategy. Game theorists study the predicted and actual behavior of individuals in games, as well as optimal strategies. Seemingly different types of interactions can exhibit similar incentive structures, thus all exemplifying one particular game.
John von Neumann and Oskar Morgenstern first formalized the subject in 1944 in their book Theory of Games and Economic Behavior.
The psychological theory of games, which originates with the psychoanalytic school of transactional analysis, remains a largely unrelated area.
Zero-sum and non-zero-sum games
In zero-sum games the total benefit to all players in the game, for every combination of strategies, always adds to zero (or more informally put, a player benefits only at the expense of others). Go, poker exemplify zero-sum games, because one wins exactly the amount one's opponents lose. Most real-world examples in business and politics, as well as the famous prisoner's dilemma are non-zero-sum games, because some outcomes have net results greater or less than zero. Informally, a gain by one player does not necessarily correspond with a loss by another. For example, a business contract ideally involves a positive-sum outcome, where each side ends up better off than if they did not make the deal.
Note that one can more easily analyze a zero-sum game; and it turns out that one can transform any game into a zero-sum game by adding an additional dummy player (often called "the board"), whose losses compensate the players' net winnings.
Risk aversion
One must assume risk-neutral participants in the game. This means that, for example, they would value a bet with a 50% chance of receiving 20 'points' and a 50% chance of paying nothing as worth 10 points. However, in reality people often exhibit risk averse behavior and prefer a more certain outcome - they will only take a risk if they expect to make money on average. Subjective expected utility theory explains how to derive a measure of utility which will always satisfy the criterion of risk neutrality, and hence serve as a measure for the payoff in game theory.
Game shows often provide examples of risk aversion. For example, if a person has a 1 in 3 chance of winning $50,000, or can take a sure $10,000, many people will take the sure $10,000.
Lotteries can show the opposite behavior of risk seeking: for example many people will risk $1 to buy a 1 in 14,000,000 chance of winning $7,000,000.
Poker Psychology
After all is said and done, poker is ultimately about psychology - playing against your competitors. For example, many games often end with a very small hand, such as a pair of 7s, beating a smaller hand, such as a pair of 3s. Never forget that your hand doesn't have to be the best hand possible. It simply has to be better than what everybody ELSE has!
Knowing what your opponents have is an art, not a science. Many successful (and unsuccessful!) poker players talk about "tells" - twitches, trembles, and other bodily signs that might give you a clue as to what your opponent has. In time, you may even learn to be able to "read" those tells. Mastering the psychology of poker, however, is much more important (and, in fact, a crucial foundation before reading tells is even possible).
Poker psychology boils down to your ability to watch how others play, and use that experience to judge how your opponents may be playing in the current hand. It is critical that you never become distracted from the game. For example, do not watch TV, even during a friendly game, for this will deprive you of the information you gain while watching your opponents. Even in a friendly game, your "friends" are trying to take your money from you!
The simplest layer of poker psychology is to watch what your opponents visibly do based on their own cards. For example, keep track of how each player bets. If you have problems doing this, start
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