Name of the Teacher: Gayathri Ravikumar

Department: Commerce PG.

Subject/paper Quantitative Techniques for Business Decision-1

Class M.com

Year II/SEM IV

Date 17/04/2020

Class Time 10:00-11:00am

Unit IV

Topic Game theory

Lesson 4

GAME THEORY
1) What should be the best strategy for A and B in the following game? What is the value of the
game? Assume ‘A’ as maximizing player?

b1 b2 b3
A
a1 10 20 30

a2 30 50 60

a3 20 40 50

Sol)

B(minimax)

B1 b2 b3 Row
Minima

a1 10 20 30 10
A(maximin)
a2 30 50 60 30 min
 a3 -20 40 50 -20

Col maxima 30 50 60

max

There exist a saddle point

Saddle point =30

Value of Game=30

Pure strategy=A2 and B1

Game is in favor of ‘A’.

2 ) What should be the best strategy for A and B in the following game ? What is the value of the game?
Assume ‘A’ as maximizing player?

b1 b2 b3

A a1 -10 -11 -1

a2 9 -8 -6

a3 20 -10 -13

Sol)

B(minimax)

b1 b2 b3 Row
minima

a1 -10 -11 -1 -11

A(maximin)
a2 9 -8 -6
 -8 max

a3 20 -10 -13
-13
Col maxima 20 -8 -1

min

There exist a saddle point

Saddle point = -8

Value of game = -8

Pure strategy = A2 and B2

Game is in favor of ‘B’.

3)What should be the best strategy for A and B in the following game? What is the value of the game?
Assume ‘A’ is playing as maximizing player?

b1 b2 b3

A a1 2 -3 7

a2 5 5 6

a3 1 4 -4

Sol)

B(minimax)

b1 b2 b3 Row
minima

a1 2 -3 7 -3
A(maximin)
a2 5 5 6 5 max

a3 1 4 -4 -4
 Col maxima 5 5 7

min min

There are two saddle points

Saddle point = 5

Value of game = 5

Pure strategy = A2,B1 and B2

Game is in favor of ‘A’.

4)What should be the best strategy for A and B in the following game? What is the value of the game?
Assume ‘A’ playing as a maximizing player?

b1 b2 b3

A a1 -10 -11 -1

a2 9 -8 -6

a3 20 -10 -1

Sol)

B(minimax)

b1 b2 b3 Row
minima

a1 -10 -11 -1 -11

A(maximin)
a2 9 -8 -6 -8 max
 a3 20 -10 -1 -10

Col maxima 20 -8 -1

min

This is a 3x3 Pay off matrix. When there is a saddle point i.e; there exists pure strategy 3x3 pay off table is
reduced to 1x1 pay off table by adopting dominating strategy.

B1 is dominated by B2 Therefore eliminate B1

B3 is dominated by B2 therefore eliminate B3

A1 is dominated by A2 therefore eliminate A1

A3 is dominated by A2 therefore eliminate A3

b1 b2 b3

a -10 - -1
1 11

a 9 -8 -6
2

a 20 - -1
3 10

Value of game = -8

Pure strategy A2 and B2

Game is in favor of ‘B’.

------------------------------

5) What should be the best strategy for A and B in the following game? What is the value of game?

Assume ‘A’ playing as maximizing player?

 B

b1 b2

A a1 3 5

a2 - 1
10

Sol)

B(minimax)

b1 b2 Row minima

a1 3 5 3 max

A(maximin) a2 -10 1 -10

Colmaxima 3 5

min

This is 2x2 pay off matrix. There is a saddle point and exists pure strategy 2x2 can be reduced to 1x1 by
using dominating strategy.

A2 is dominated by A1 therefore eliminate A2

B2 is dominated by B1 therefore eliminate B2

b1 b2

a 3 5
1

a -10 1
2

Therefore value of game = 3

Pure strategy A1 and B1

Game is in favor of ‘A’.