Coordination Game and Battle of Sexes

Lecture 04 - Game Theory

170010033
Swapnik Jagarlapudi

Hunter Game:
There are 2 hunters, H​1​ and H​2​. They can hunt either a rabbit (R) or deer
(D).
If both set a high price, both get a profit of 500. If both set a low price, both
get a profit of 250. If one of them sets a low price and the other sets a high
price, the one who sets a lower price will get a profit of 750 while the other
gets none, as they attract the whole market base.
H​1​\H​2 D R
D 2,2 0,1
R 1,0 1,1

BR​1​(D) = D
BR​1​(R) = R
BR​2​(D) = D
BR​2​(R) = R

The best outcome for each player depends on the response of the other
player. Here we have 2 Nash equilibria, (D,D) and (R,R) and 1 Pareto
optimal outcome, (D,D). There is no dominant strategy as the BR depends
on the response of the other player.

Startup Game

This is another coordination game similar to the hunting game. Players are
startup workers, and have 2 options - Quit (Q) or Continue Working (W).
It also has 2 Nash Equilibria, 1 Pareto Optimal Outcome and no Dominant
Strategies.
 E​1​\E​2 W Q
W 2,2 0,1
Q 1,0 1,1

Investment Game

There are several players, who can invest either 0 or 10 into a company.
● The player can invest 10; If 90% or more of the players invest 10,
they all get a payoff of 5; otherwise payoff is -10
● Player invests 0; If no one invests, then payoff is 0 for everyone

This game, similar to the above 2, has 2 Nash Equilibria - > 90% invest or
no one invests.

Battle of Sexes

A boy and a girl are performing an activity together, and they have 2
options: Harry Potter Movie (M) and Cricket Game (G). The game table is
as follows:

P​1​(Boy)\P​2​(Girl) G M
G 10,5 0,0
M 0,0 5,10

BR​1​(C) = C
BR​1​(G) = G
BR​2​(C) = C
BR​2​(G) = G

We have 2 Nash Equilibria here. Boy has higher payoff for Cricket since he
prefers cricket and vice versa for the Girl and Movie. As each player has a
different preference and the payoffs are different, Battle of Sexes is not a
coordination game. Here, both Nash Equilibria are Pareto Optimal as there
is no simultaneous increase in payoff for both players from either of the
states. Equilibrium can only be achieved through compromise. Thus, we
see that, cumulatively over several activities, both players compromise for
the other. Thus this can be considered a ​mixed strategy.