Applying Game Theory in Finance

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The seminar paper explores the influential work of Modigliani and Miller, which marked the inception of modern managerial finance by applying rigorous economic analysis to financial research. It discusses how their initial models faced criticism for being overly simplistic and lacking practical application, prompting the authors to refine their assumptions in subsequent papers. By relaxing conditions like symmetric information and complete contracts, they aimed to enhance the explanatory power of their models while maintaining the foundational principles established in their original work.