Does game theory always predict real-world situations involving strategic interactions? Why or why not?

Question

What will be an ideal response?

Answer 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 works–they 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.