Game Theory was developed by John Von Neumann in his book The Theory of Games and Economic Behavior.  Game theory is used to study games where two groups are in direct competition with each other, and a given group's decision has unpleasant consequences for them and/or the opponent.  Game Theory is the basis for the famous Prisoner's Dilema problem where people decide whether or not to cooperate with each other.  One variation of the problem (though not the typical one) can be accessed at http://www.drybones.demon.co.uk/java/prisoner.html.  Game theory also has a large role in a 1983 movie starring Matthew Broderick and Ally Sheedy.  In
case you can't figure out the name of the movie, I'll give you a hint ... it has the word "Games" in it. (Answer in references)

Author: Eric Libicki

References:
Jones, Phillip  "John Von Neumann"   The World Book Encyclopedia 1988

Saari, Donald "Game theory" The World Book Encyclopedia 1988

War Games MGM 1983