What is game theory primarily concerned with?

Game theory is primarily concerned with analyzing strategic interactions where the decisions of one participant affect the outcomes for others. It provides a framework for understanding how individuals or firms make choices when their success depends not only on their own actions but also on the actions of others. This interdependence is key to game theory, as it examines how participants anticipate and respond to the behavior of others in competitive or cooperative scenarios.

In this context, game theory helps to model situations like pricing strategies in oligopolies, negotiation tactics, or any scenario involving strategic decision-making. By utilizing tools like payoff matrices and Nash equilibria, game theory can effectively predict likely outcomes based on the choices made by all involved parties.

Other areas mentioned, such as predicting long-term economic trends, studying government regulations, or modeling consumer preferences, do not capture the essence of game theory. While they may involve strategic considerations, they do not specifically focus on the interactive decision-making processes central to game theory's analysis of behavior in situations of interdependence. Therefore, the correct understanding is that game theory's primary concern lies in the analysis of interactions and the outcomes derived from them.