Does game theory always predict real-world situations involving ...

[stephzh]

Does game theory always predict real-world situations involving strategic interactions? Why or why not?
 
  What will be an ideal response?

Question 2

Which group below will generally have a more difficult time finding employment if a nation's minimum wage were increased?
 
  A) Those with more work experience
  B) Those who are among the younger job seekers
  C) Those who form the majority race in the population
  D) All of the above.

[Jsherida]

Answer to Question 1

Game theory might not always be able to predict real-world situations involving strategic interactions. This is because of two reasons. First, in real-world situations, the payoffs are determined by the attitudes and feelings of individuals as well as by their monetary returns.
A second reason why we might not observe what game theory predicts is that it is, in essence, a theory, and models are not literal descriptions of how the world worksthey are merely useful abstractions. As such, game theory abstracts from several details. In many situations, one player may be more cunning, wiser, or more experienced than another. For example, of two chess players, the more experienced, more clever player is likely to win.

Answer to Question 2

B