Document image binarization classifies each pixel in an input document image as either foreground or background under the assumption that the document is pseudo binary in nature. However, noise introduced during acquisition or due to aging or handling of the document can make binarization a challenging task. This paper presents a novel game theory inspired binarization technique for degraded document images. A two-player, non-zero-sum, non-cooperative game is designed at the pixel level to extract the local information, which is then fed to a K -means algorithm to classify a pixel as foreground or background. We also present a preprocessing step that is performed to eliminate the intensity variation that often appears in the background and a post-processing step to refine the results. The method is tested on seven publicly available datasets, namely, DIBCO 2009-14 and 2016. The experimental results show that game theory inspired binarization outperforms competing state-of-the-art methods in most cases.