A Game Theoretic Explanation of Economic Growth

Abstract

This paper uses game theory to explain economic growth. It explores a possible reason outside the purview of conventional explanations of economic growth. The paper does not consider natural resources, human capital or capital endowment of a country in determining it being rich or poor. Alternatively, it uses game theory to capture the inconspicuous features of a society that may lead to it being prosperous or not.

It shows that cooperative games among the citizens lead a poor country to become rich over time while non-cooperative games can make a developed country become poor over time. Also, the paper provides real life explanations supporting this notion. Finally, the paper explores possible reasons for societies choosing cooperative and non-cooperative games.