In game theory

Game theory

Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...

, the centipede game, first introduced by Rosenthal

Robert W. Rosenthal

Robert W. Rosenthal was an American economist, most known for his contributions to game theory.He obtained a B.A. in political economy from Johns Hopkins University ,M.S. and...

 (1981), is an extensive form game

Extensive form game

An extensive-form game is a specification of a game in game theory, allowing explicit representation of a number of important aspects, like the sequencing of players' possible moves, their choices at every decision point, the information each player has about the other player's moves when he...

 in which two players take turns choosing either to take a slightly larger share of a slowly increasing pot, or to pass the pot to the other player. The payoffs are arranged so that if one passes the pot to one's opponent and the opponent takes the pot on the next round, one receives slightly less than if one had taken the pot on this round.