Game Theory: Unit - Iii

04-Oct-18
Game Theory
• Invented by von
Neumann and
Morgenstren in 1944.
• Game Theory is a
mathematical theory
that deals with
models of conflict
and cooperation.
UNIT - III
Dr. Devendra Choudhary, Govt.
Engineering College Ajmer
Some Applications of Game Theory What is a Game?

• The study of product portfolio • A game consists of
• The study of operational / marketing – a set of players
strategies. – a set of strategies for
• Elections each player
– the payoffs to each
player for every
possible list of
strategy choices by
the players.
Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

Engineering College Ajmer Engineering College Ajmer
1
04-Oct-18
Some Definitions for Understanding Some Definitions for Understanding

Game theory Game theory
Strategy
Players A strategy defines a set of moves or actions a
Participants of a given game or games or it is one player will follow in a given game.
of the opposing interests or person. Dominant Strategy
A strategy is dominant if it is always better than

Payoff any other strategy, regardless of what opponents
The amount of utility (usually money) a player may do.
wins or loses at a specific stage of a game. • Pure strategy
• Mixed strategy
ZERO-SUM GAMES
Two-Player Games
• A game with just two players is a two-player Penny Matching:
game.  Each of the two players has a penny.
• We will study only games in which there are  Two players must simultaneously choose whether to show the
two players. Head or the Tail.
• Chess, back-gammon, tic-tac-toe, and rock-  Both players know the following rules:
paper-scissors are examples.  If two pennies match (both heads or both tails) then player
2 wins player 1’s penny.
 Otherwise, player 1 wins player 2’s penny.

2
04-Oct-18
Player 2 Player 2
Strategies Strategies
Head Tail Head Tail
Head -1 , 1 1 , -1 Head -1 1
Player 1
1 , -1 -1 , 1 Payoff Player 1
1 -1 Payoff
Tail Tail

An Example of a Two-Player Game An Example of a Two-Player Game

Player B
• The players are called A and B.
L R
• Player A has two strategies, called “Up” and
“Down”. U (3,9) (1,8) This is the
• Player B has two strategies, called “Left” and Player A game’s
“Right”. D (0,0) (2,1) payoff matrix.
• The table showing the payoffs to both players for
each of the four possible strategy combinations is
the game’s payoff matrix. Player A’s payoff is shown first.
• Player A as the maximizing goal (Chance of wining) Player B’s payoff is shown second.
• player B as the minimizing goal(Chance of losing)
3
04-Oct-18

Player B Player B
L R L R
U (3,9) (1,8) This is the U (3,9) (1,8) This is the

Player A game’s Player A game’s
D (0,0) (2,1) payoff matrix. D (0,0) (2,1) payoff matrix.
E.g. if A plays Up and B plays Right then And if A plays Down and B plays Right
A’s payoff is 1 and B’s payoff is 8. then A’s payoff is 2 and B’s payoff is 1.


Player B Player B
L R L R
U (3,9) (1,8) U (3,9) (1,8)

Player A Player A
D (0,0) (2,1) D (0,0) (2,1)
A play of the game is a pair such as (U,R)

What plays are we likely to see for this
where the 1st element is the strategy
game?
chosen by Player A and the 2nd is the
strategy chosen by Player B.
4
04-Oct-18

Player B Player B
L R L R
Is (U,R) a Is (U,R) a
U (3,9) (1,8) U (3,9) (1,8)
likely play? likely play?
Player A Player A
D (0,0) (2,1) D (0,0) (2,1)
If B plays Right then A’s best reply is Down

since this improves A’s payoff from 1 to 2.
So (U,R) is not a likely play.


Player B Player B
L R L R
Is (D,R) a Is (D,R) a
U (3,9) (1,8) U (3,9) (1,8)
Player A Player A
D (0,0) (2,1) D (0,0) (2,1)
If B plays Right then A’s best reply is Down.

5
04-Oct-18

Player B Player B
L R L R
Is (D,R) a Is (D,L) a
U (3,9) (1,8) U (3,9) (1,8)
Player A Player A
D (0,0) (2,1) D (0,0) (2,1)
If B plays Right then A’s best reply is Down.

If A plays Down then B’s best reply is Right.
So (D,R) is a likely play.


Player B Player B
L R L R
Is (D,L) a Is (U,L) a
U (3,9) (1,8) U (3,9) (1,8)
Player A Player A
D (0,0) (2,1) D (0,0) (2,1)
If A plays Down then B’s best reply is Right,

so (D,L) is not a likely play.

6
04-Oct-18

Player B Player B
L R L R
Is (U,L) a Is (U,L) a
U (3,9) (1,8) U (3,9) (1,8)
Player A Player A
D (0,0) (2,1) D (0,0) (2,1)
If A plays Up then B’s best reply is Left. If A plays Up then B’s best reply is Left.
If B plays Left then A’s best reply is Up.
So (U,L) is a likely play.

Nash Equilibrium An Example of a Two-Player Game

Player B
• A play of the game where each strategy is a L R
best reply to the other is a Nash equilibrium.
U (3,9) (1,8)
• Our example has two Nash equilibria; (U,L) Player A
and (D,R). D (0,0) (2,1)
(U,L) and (D,R) are both Nash equilibria for

the game.

7
04-Oct-18
An Example of a Two-Player Game The Prisoner’s Dilemma

Player B
L R • Two criminals are arrested. They are suspected of having
robbed a bank. Because there is very little evidence, the two
can be sentenced to a year's imprisonment on the basis of
U (3,9) (1,8) what evidence there is. For this reason, the two are
Player A questioned separately, with the aim of getting them to
(0,0) (2,1) confess to the crime through incentives, and because of the
D uncertainty regarding what the other is saying. A deal is
offered to each of them: if they confess, they will be free - but
(U,L) and (D,R) are both Nash equilibria for only if the other prisoner does not confess: in this case he will
go down for 10 years. if they both confess, they will each go to
the game. But which will we see? Notice prison for five years.
that (U,L) is preferred to (D,R) by both • What should each prisoner do?
players. Must we then see (U,L) only?
The Prisoner’s Dilemma: payoff matrix The Prisoner’s Dilemma

The two criminals are two players, each of whom has
• Assume that the prisoners cannot communicate with
two strategies available: to confess or not to confess. each other, the strategies and rewards for each are
shown.
Prisoner 2 • For each prisoner the “confess” strategy dominates the
“don’t confess” strategy. Each prisoner seeks to
eliminate any dominated strategies from consideration.
Prisoner 1 Confess Don’t • On the other hand if each prisoner chooses the
Confess
dominated “don’t confess” strategy, then each prisoner
Confess (-5, -5) (0, -10) will spend only 1 year in prison.
• If each prisoner chooses his dominated strategy, both
Don’t (-10, 0) (-1, -1)
are better off than if each prisoner chooses his
Confess undominated strategy.

8
04-Oct-18
The Prisoner’s Dilemma The Prisoner’s Dilemma

Prisoner 2 Prisoner 2
C DC C DC
C (-5, -5) (0, -10) C (-5,-5) (0, -10)
DC (-10, 0) (-1, -1) DC (-10, 0) (-1, -1)
If Prisoner 1 plays confess then Prisoner 2’s

What plays are we likely to see for this best reply is Confess.
game?


C DC C DC
C (-5,-5) (0, -10) C (-5,-5) (0, -10)
DC (-10, 0) (-1, -1) DC (-10, 0) (-1, -1)
If Prisoner 1 plays Do not Confess then So no matter what Prisoner 1 plays,

Prisoner 2’s best reply is Confess. Prisoner 2’s best reply is always Confess.
If Prisoner 1 plays Do not Confess then Therefore, Confess is a dominant strategy
Prisoner 2’s best reply is Confess. for Prisoner 2.
9
04-Oct-18

C DC C DC
C (-5,-5) (0, -10) C (-5,-5) (0, -10)
DC (-10, 0) (-1, -1) DC (-10, 0) (-1, -1)
Similarly, no matter what Prisoner 2 plays, So the only Nash equilibrium for this
Prisoner 1’s best reply is always Confess. game is (C,C), even though (S,S) gives
Hence, Confess is a dominant strategy for both Prisoner 1 and Prisoner 2 better payoffs.
Prisoner 1 also. The only Nash equilibrium is inefficient.
Who Plays When? Who Plays When?

• In both examples the players chose their • But there are games in which one player plays
strategies simultaneously. before another player.
• Such games are simultaneous play games. • Such games are sequential play games.
• The player who plays first is the leader. The
player who plays second is the follower.

10
04-Oct-18
Two-Person Zero-Sum Games Two-Person Zero-Sum Games

Column Player
• A game with two players Row

Player
Stone Paper Scissors Row
minimum
• A gain of one player equals the loss to the Stone 0,0 -1 , 1 1 , -1 -1
other player Paper 1 , -1 0,0 -1 , 1 -1
Scissors -1 , 1 1 , -1 0,0 -1
• The payoffs for the players always adds up to Column +1 +1 +1 -1
zero minimum
• Two-person zero-sum is played according to Column Player
Row Stone Paper Scissors Row

the maximin (maximum of all row minimum Player minimum
values) – minimax (minimum of all column Stone 0 -1 +1 -1
maximum values) principle Paper
Scissors
+1
-1
0
+1
-1
0
-1
-1
Column +1 +1 +1 -1
Dr. Devendra Choudhary, Govt. minimum Dr. Devendra Choudhary, Govt.
Two-Person Zero-Sum Games: SADDLE Example 1: Saddle point

POINT
• Each player would act as to maximise his/her Player B
minimum gain or minimise his/her maximum B1 B2 B3 B4 B5
loss
A1 2 4 3 8 4
• A saddle point is obtained when
Player A
A2 5 6 3 7 8
maximin = minimax
A3 6 7 9 8 7
• A saddle point can also be thought of as a
equilibrium point in that neither player can A4 4 2 8 4 3
benefit from a unilateral change in strategy.
11
04-Oct-18
Example 1: Saddle point Example 1: Saddle point
Player B Player B
Row Row
B1 B2 B3 B4 B5 Min. B1 B2 B3 B4 B5 Min.
A1 2 4 3 8 4 2 A1 2 4 3 8 4 2
Player A
Player A
A2 5 6 3 7 8 3 A2 5 6 3 7 8 3
A3 6 7 9 8 7 6 A3 6 7 9 8 7 6
A4 4 2 8 4 3 2 A4 4 2 8 4 3 2
Column
Max. 6 7 9 8 8
Minimax = Maximin
Example 2: Saddle point Example 2: Saddle point

Player B Player B
Row Min.
B1 B2 B3 B4 B1 B2 B3 B4
A1 7 6 8 9 A1 7 6 8 9 6
Player A
Player A
A2 -4 -3 9 10 A2 -4 -3 9 10 -4
A3 10 2 -5 0 A3 10 2 -5 0 -5
Column
Max. 10 6 9 10
Minimax = Maximin
12
04-Oct-18
Two-Person Zero-Sum Games: PRINCIPLE Two-Person Zero-Sum Games: PRINCIPLE

OF DOMINANCE OF DOMINANCE
• Not all two-person zero-sum games have saddle • From the gainer’s (row player) point of view, if
points a strategy gives more gain than another
• How can the value and optimal strategies for a strategy for all conditions, then the first
game that does not have a saddle point be strategy dominates over the other and the
found? second strategy can be ignored.
• The principle of dominance states that if the • Similarly from loser’s (column player) point
strategy of a player dominates over the other view, if a strategy involves lesser loss than
strategy in all conditions than the latter strategy other in all conditions, then the second
can be ignored because it will not affect the strategy can be omitted.
solution in any way.
Principle of Dominance: Example 1 Principle of Dominance: Example 1

Player B Player B Row
B1 B2 B3 B4 B1 B2 B3 B4 Min.
A1 1 9 6 0 A1 1 9 6 0 0
Player A
Player A
A2 2 3 8 4 A2 2 3 8 4 2
A3 -5 -2 10 -3 A3 -5 -2 10 -3 -5
A4 7 4 -2 -5 A4 7 4 -2 -5 -5
Col. Max. 7 9 10 4
Minimax ≠ Maximin
13
04-Oct-18

Player B Player B
B1 B2 B3 B4 B1 B2 B3 B4
A1 1 9 6 0 A1 1 9 0
Player A
Player A
A2 2 3 8 4 A2 2 3 4
A3 -5 -2 10 -3 A3 -5 -2 -3
A4 7 4 -2 -5 A4 7 4 -5


Player B Player B Ave.
B1 & B4
B1 B2 B3 B4 B1 B2 B3 B4
A1 1 9 0 A1 1 9 0 0.5
Player A
Player A
A2 2 3 4 A2 2 3 4 3
A3 A3
A4 7 4 -5 A4 7 4 -5 1

14
04-Oct-18

Player B Player B
B1 B2 B3 B4 B1 B2 B3 B4
A1 1 0 A1
Player A
Player A
A2 2 4 A2 2 4
A3 A3
A4 7 -5 A4 7 -5
Dr. Devendra Choudhary, Govt. A 4X4 game has been

Dr. Devendrareduced
Choudhary, Govt. into a 2X2 game

B1 B2 B3 B4 B1 B2 B3 B4 Min.
A1 2 2 4 0 A1 2 2 4 0 0
Player A
Player A
A2 3 4 2 4 A2 3 4 2 4 2
A3 4 2 4 0 A3 4 2 4 0 0
A4 0 6 0 8 A4 0 6 0 8 0
Col. Max. 4 6 4 8
Minimax ≠ Maximin
15
04-Oct-18

Player B Player B
B1 B2 B3 B4 B1 B2 B3 B4
A1 2 2 4 0 A1
Player A
Player A
A2 3 4 2 4 A2 4 2 4
A3 4 2 4 0 A3 2 4 0
A4 0 6 0 8 A4 6 0 8


Player B Ave. B3 Player B
& B4
B1 B2 B3 B4 B1 B2 B3 B4
A1 A1
Player A
Player A
A2 4 2 4 3 A2 2 4
A3 2 4 0 2 A3 4 0
A4 6 0 8 4 A4 0 8

16
04-Oct-18
Principle of Dominance: Example 2 2X2 game: Arithmetic method

Player B
Player B
B3 B4
B1 B2 B3 B4
Player
A3 4 0
A1
A
A4 0 8
Player A
A2
A3 4 0
A4 0 8 • Find the difference of two numbers in Column I and put
it under the Column II, neglecting negative sign if occurs.

2X2 game: Arithmetic method 2X2 game: Arithmetic method

Player B Player B
B3 B4 B3 B4
Player
Player
A3 4 0 A3 4 0
A
A
A4 0 8 A4 0 8
4 8 4
• Find the difference of two numbers in Column I and put • Similarly, find the difference of two numbers in Column II
it under the Column II, neglecting negative sign if occurs. and put it under the Column I, neglecting negative sign if
occurs.
17
04-Oct-18
2X2 game: Arithmetic method 2X2 game: Arithmetic method

Player B Player B
B3 B4 B3 B4 Prob.
Player
Player
A3 4 0 8 A3 4 0 8 8/12
A
A
A4 0 8 4 A4 0 8 4 4/12
8 4 8 4
Prob. 8/12 4/12
• Do similar steps for two rows also. • Optimum strategy for Player A {0, 0, 8/12, 4/12}
• Optimum strategy for Player B { 0, 0, 8/12, 4/12}
• The Value of game V = {4*8/12+0*4/12} = 8/3
2X2 game: Algebraic Method

2X2 game: Arithmetic method
Player B
Player B B1 B2
Player A
B3 B4 Prob. A1 5 1
Player
A3 4 0 8 8/12 A2 3 4
A
A4 0 8 4 4/12
8 4
Prob. 8/12 4/12
• The Value of game V = {0*8/12+8*4/12} = 8/3

18
04-Oct-18
2X2 game: Algebraic Method 2X2 game: Algebraic Method

Player B Player B
B1 B2 B1 B2
Player A
Player A
A1 5 1 p A1 5 1
A2 3 4 1–p A2 3 4
q 1–q
B’s pure strategy A’s expected payoff A’s pure strategy B’s expected payoff
B1 5*p + 3*(1 – p) = 2p + 3 A1 5*q + 1*(1 – q) = 4q + 1
B2 1*p + 4*(1 – p) = 4 – 3p A2 3*q + 4*(1 – q) = 4 – q
Expected payoff under both conditions are equal, that is: Expected payoff under both conditions are equal, that is:
2pDr.+Devendra
3 = 4Choudhary,
– 3p orGovt.
p = 1/5 4q + 1 = 4Choudhary,
Dr. Devendra – q or Govt.
q = 3/5
2X2 game: Algebraic Method

2Xn games: Graphical Method
Player B
Player B
B1 B2
Player A
B1 B2 B3 Probability
A1 5 1 1/5
A1 1 3 11 X1
Player
A2 3 4 4/5
A
3/5 2/5 A2 8 5 2 X2= 1-X1
B’s strategies A’s expected payoff

Optimum strategies for Player A {1/5, 4/5}
Optimum strategies for Player B {3/5, 2/5} B1 1*X1 + 8*(1-X1) = 8 – 7*X1
Value of game V is 5*1/5 + 3*4/5 = 17/5
B2 3*X1 + 5*(1-X1) = 5 – 2*X1
B3 11*X1 + 2*(1-X1) = 2 + 9*X1
19
04-Oct-18
2Xn games: Graphical Method 2Xn games: Graphical Method

11 11 11 11
10 10 10 10
9 9 9 9
8 8 8 8
7 7 7 7
A’s expected 6 6 A’s expected 6 6
payoff lines 5 5 maximum 5 5
payoff
4 4 4 4
3 3 3 3
2 2 2 feasible region 2
1 1 1 1
X1 = 0 X1 = 1 X1 = 0 X1 = 1
2Xn games: Graphical Method mX2 games: Graphical Method

A’s feasible expected payoff lines
2 + 9*X1 = V = 5 – 2*X1
Player B
That is,
2 + 9*X1
X1 = 3/11, X2 = 8/11 and B1 B2
V = 49/11. A1 2 7
Player A
Subsequently, for Player B
A2 3 5
5 - 2*X1
B2 and B3 strategies are A3 11 2
Feasible. Therefore, Probability Y1 Y2 = 1 - Y1
Y2 + Y 3 = 1
X1 = 0 X =11 3*Y2 + 11*(1 – Y2) = V = 49/11 A’s strategies B’s expected payoff
Player B or A1 2*Y1 + 7*(1-Y1) = 7 – 5*Y1
B2 B3 5*Y2 + 2*(1 – Y2) = V = 49/11.
A2 3*Y1 + 5*(1-Y1) = 5 – 2*Y1
Player
A1 3 11 That is,
A
A2 5 2 Dr. Devendra
Y2Choudhary,
Engineering
= 9/11 Govt.
College Ajmer
and Y3 = 2/11. A3 11*Y1 + 2*(1-Y1) = 2 + 9*Y1
20
04-Oct-18
mX2 games: Graphical Method mX2 games: Graphical Method

11 11 11 11
10 10 10 10
9 9 9 9
8 8
Feasible
8 8
7 7 7 region 7
B’s expected B’s expected
6 6 6 6
payoff lines minimum
5 5 payoff 5 5
4 4 4 4
3 3 3 3
2 2 2 2
1 1 1 1
Y1 = 0 Y1 = 1
Dr. Devendra Choudhary, Govt. Y1 = 0 Y1 = 1
mX2 games: Graphical Method

B’s feasible expected payoff lines
2 + 9*Y1 = V = 7 – 5*Y1 Two-Person CONSTANT-Sum Games
That is,
2 + 9*Y1
Y1 = 5/14, Y2 = 9/14 and • A two-person constant-sum game is a two-
V = 73/14.
player game in which, for any choice of both
Subsequently, for Player A
player’s strategies, the row player’s reward
7 - 5*Y1
A1 and A3 strategies are and the column player’s reward add up to a
feasible. Therefore, constant value c.
Y1 = 0 Y =11
X1 + X3 = 1
2*X1 + 11*(1 – X1) = V = 73/14
Player B or
B2 B3 7*X1 + 2*(1 – X1) = V = 73/14.
Player
A1 2 7 That is,
A
A3 11 2 Dr. Devendra
X1Choudhary,
= 9/14 Govt.
and X3 = 5/14. Dr. Devendra Choudhary, Govt.
21
04-Oct-18
Example Example : PAYOFF MATRIX

• Observe that for any choice of strategies by both
• Two players (called Odd and Even) simultaneously players, there is a player who can benefit by
choose the number of fingers (1 or 2) to put out. unilaterally changing his or her strategy.
– If the sum of the fingers put out by both players is
odd, then Odd wins $1 from Even. • Thus, no choice of strategies by the player is stable.
Column Player (Even)
– If the sum of the fingers put out by both players is
Row Player 1 Finger 2 Fingers Row
even, then Even wins $1 from Odd. (Odd) minimum
• Consider the row player to be Odd and the

1 Finger -1 +1 -1
column player to be Even.
2 Fingers +1 -1 -1
• Determine whether this game has a saddle point.
Column +1 +1
Maximum
3X3 or mXn game: Linear

EXAMPLE: Stone, Paper, Scissors GAME
Programming
• Linear programming can be used to find the • Two players must simultaneously utter one of the
three words stone, paper, or scissors and show
value and optimal strategies for any two- corresponding hand signs.
person zero-sum game. • If both players utter the same word, then the
game is a draw.
• Otherwise one player wins $1 from the other
player according to the these rules
– Scissors defeats (cuts) paper
– Paper defeats (covers) stone
– Stone defeats (breaks) scissors
• Find the optimal strategies for this two-person
zero-sum game.
22
04-Oct-18
EXAMPLE: Stone, Paper, Scissors GAME EXAMPLE: Stone, Paper, Scissors GAME
Min
Stone Paper Scissor Stone Paper Scissor
Stone 0 -1 1 Stone 0 -1 1 -1
Player A
Player A
Paper 1 0 -1 Paper 1 0 -1 -1
Scissor -1 1 0 Scissor -1 1 0 -1
Col. Max. 1 1 1
EXAMPLE: Stone, Paper, Scissors GAME EXAMPLE: Stone, Paper, Scissors GAME
Stone Paper Scissor • The column player has chosen Stone Paper Scissor • The row player has chosen a
a mixed strategy (y1, y2, y3) mixed strategy (x1, x2, x3) then
Stone Stone the optimal strategy can be
0 -1 1 then the optimal strategy can 0 -1 1 found by solving the LP
Paper be found by solving the LP Paper
1 0 -1 1 0 -1 Max z = v
Scissor Scissor
-1 1 0 Min z = w -1 1 0 s.t.
s.t.
v ≤ x2 – x3 (Stone constraint)
x1 = probability that row player chooses stone w ≤ -y2 + y3 (Stone constraint) The row player’s LP is the dual of
x2 = probability that row player chooses paper v ≤ -x1 + x3 (Paper constraint)
x3 = probability that row player chooses scissors w ≤ y1 - y3 (Paper constraint) the column player’s LP.
y1 = probability that row player chooses stone v ≤ x1 – x2 (Scissor constraint)
y2 = probability that row player chooses paper w ≤ -y1 + y2 (Scissor constraint) x1 + x2 +x3 = 1
y3 = probability that row player chooses scissors
y1 + y2 +y3 = 1 x1, x2, x3 ≥ 0
y 1 , y 2 , y3 ≥ 0
23

Game Theory: Unit - Iii

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Game Theory: Unit - Iii

Uploaded by

Copyright:

Available Formats

04-Oct-18

Some Applications of Game Theory What is a Game?

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

Some Definitions for Understanding Some Definitions for Understanding

A strategy is dominant if it is always better than

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

An Example of a Two-Player Game An Example of a Two-Player Game

An Example of a Two-Player Game An Example of a Two-Player Game

U (3,9) (1,8) This is the U (3,9) (1,8) This is the

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

An Example of a Two-Player Game An Example of a Two-Player Game

U (3,9) (1,8) U (3,9) (1,8)

A play of the game is a pair such as (U,R)

An Example of a Two-Player Game An Example of a Two-Player Game

If B plays Right then A’s best reply is Down

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

An Example of a Two-Player Game An Example of a Two-Player Game

If B plays Right then A’s best reply is Down.

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

An Example of a Two-Player Game An Example of a Two-Player Game

If B plays Right then A’s best reply is Down.

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

An Example of a Two-Player Game An Example of a Two-Player Game

If A plays Down then B’s best reply is Right,

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

An Example of a Two-Player Game An Example of a Two-Player Game

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

Nash Equilibrium An Example of a Two-Player Game

(U,L) and (D,R) are both Nash equilibria for

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

An Example of a Two-Player Game The Prisoner’s Dilemma

The Prisoner’s Dilemma: payoff matrix The Prisoner’s Dilemma

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

The Prisoner’s Dilemma The Prisoner’s Dilemma

If Prisoner 1 plays confess then Prisoner 2’s

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

The Prisoner’s Dilemma The Prisoner’s Dilemma

If Prisoner 1 plays Do not Confess then So no matter what Prisoner 1 plays,

The Prisoner’s Dilemma The Prisoner’s Dilemma

Who Plays When? Who Plays When?

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

Two-Person Zero-Sum Games Two-Person Zero-Sum Games

• A game with two players Row

• A gain of one player equals the loss to the Stone 0,0 -1 , 1 1 , -1 -1

other player Paper 1 , -1 0,0 -1 , 1 -1

• Two-person zero-sum is played according to Column Player

Row Stone Paper Scissors Row

values) – minimax (minimum of all column Stone 0 -1 +1 -1

maximum values) principle Paper

Two-Person Zero-Sum Games: SADDLE Example 1: Saddle point

Example 1: Saddle point Example 1: Saddle point

Example 2: Saddle point Example 2: Saddle point

Two-Person Zero-Sum Games: PRINCIPLE Two-Person Zero-Sum Games: PRINCIPLE

Principle of Dominance: Example 1 Principle of Dominance: Example 1

Principle of Dominance: Example 1 Principle of Dominance: Example 1

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

Principle of Dominance: Example 1 Principle of Dominance: Example 1

Dr. Devendra Choudhary, Govt. Dr. Devendra Choudhary, Govt.

Principle of Dominance: Example 1 Principle of Dominance: Example 1

Dr. Devendra Choudhary, Govt. A 4X4 game has been

Principle of Dominance: Example 2 Principle of Dominance: Example 2