In a game theory framework, discuss the importance of rules, strategies, and payoffs.

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The Answer is In game theory, three elements must exist in order for a game to take place. These three components are rules, strategies, and payoffs. Rules are the instructions that dictate choice and outcomes. Strategies are options for players in which the outcome depends on both the player's choice and the choices made by other players. Payoffs are values assigned to possible outcomes of a game, including monetary, social and psychological values (one common category of these is rewards). Without rules in a game, it is prohibitively unclear how the game is to function. If strategies for playing the game are disregarded, the game would likely succumb to chaos, and no productive outcome would be realized. Finally, without some payoff, a rational actor would not participate.

In a Game Theory Framework, Discuss the Importance of Rules