Title of Lecture

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 Lesson Topics

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 Assignment

For the game in figure

a)A) Find the solution by truncation.

B) List all Colin strategies.

a)C) List all Rose strategies.

a)D)Write the matrix for the game.

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 Colin

L R
Rose Rose

L R L R

Colin Colin Colin Colin

L R L R L R L R

-1 2 1 0 -1 3 4 -2
(Payoffs to Rose)
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 Answer &
Feedback (a) RLL :−1.
Colin

L R
Colin
Rose Rose
L R
L R L R

0 -1
-1 0 -1 -2

(Payoffs to Rose)
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 (b) L/LL L/LR L/RL L/RR R/LL R/LR R/RL R/RR

(c) LL, LR, RL, RR

(d) Colin

L/LL L/LR L/RL L/RR R/LL R/LR R/RL R/RR

LL -1 -1 2 2 -1 -1 3 3
Rose

LR -1 -1 2 2 4 -2 4 -2
RL 1 0 1 0 -1 -1 3 3
RR 1 0 1 0 4 -2 4 -2

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 Constant Sum Game

The sum of the payoffs of all players always

adds up to the same constant figure for any
particular outcome

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 • Example: A business . The competition are Zeus and Athena
• Zeus Music is an industry leader in modern stereo
equipment, a company with strong name recognition in
the market
• Athena is small company
• It might be small with potential profits of about $24
million yearly
• It might be large, with profits about $40 million
• The results are shown in below slide figure
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 Chance

Small Large
market market
1/2 1/2
Z Z

Lo Hi Lo Hi

A A A A

Lo Hi Lo Hi Lo Hi Lo Hi

(16,8) (8,16) (20,4) (16,8) (30,10) (28,12) (16,24) (24,16)

Payoffs to (Zeus, Athena)

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• First, suppose that the companies make their
production choices in secret, unknown to each other

• Then Zeus' two choice nodes are in one

information set, and all four of Athena's nodes are
in one information set

• Each company has only two strategies: produce a

high quality system (Hi) or produce a lower quality
system (Lo)
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 Athena
Lo Hi
The game matrix is
Zeus Lo (23, 9) (18, 14)
Hi (18, 14) (20, 12)

1 1
Lo-Lo payoffs = 16, 8 + 30, 10 = (23, 9)
2 2

2 5
For both players , the optimal strategies are Lo, Hi
7 7
3
The value of game is 19 to Zeus and
7
4
The value of game is 12 to Athena
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• Suppose that Zeus, as industry leader, must make
its production decision first
• Athena, as a smaller and more flexible company
• Find out Zeus' decision before it makes its own

Athena’ Strategies
• Lo/Lo : Always chooses Lo
• Lo/Hi : Do whatever Zeus does
• Hi/Lo : Do opposite Zeus does
• Hi/Hi : Always choose Hi
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 Athena

Lo/Lo Lo/Hi Hi/Lo Hi/Hi

Lo (23, 9) (23, 9) (18, 14) (18, 14)

Zeus

Hi (18, 14) (20,12) (18, 14) (20,12)

The game has saddle points

Whatever Zeus does, Athena should do the opposite
and the payoff will be 18 to Zeus leaving 14 for Athena

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 Summary of Lecture

 Constant Sum Game

 Mapping Game Tree To Game Matrix

 The value of game

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 Summary of Two-Person Zero-Sum

Player II

Rock Paper Scissor

Rock 0,0 -1,1 1,-1

Player I
Paper 1,-1 0,0 -1,1

This Photo by Unknown Author is licensed under CC BY-SA

Scissor -1,1 1,-1 0,0

Payoff to each player in

each cell (P.I/P.II)

1: win
0: tie strategy payoff
-1: lose
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  Flow chart of Two-Person
Zero-Sum games
Write the payoff matrix

Movement diagram Apply maximin and minimax principle

Identify the value of game and Yes

write the optimal strategy of the Is there is saddle point
player (pure strategy)
No
Yes Is it a 2x2 matrix?
Solve by using oddment (or)
equalizing expectation No
method for mixed strategy Yes Use dominance rules reduce the size of matrix
Yes
Is payoff matrix reduced to 2x2 size? Is payoff matrix reduced to 2x2 size?
No
Use graphical method to solve the problem Is payoff matrix reduced to 2xn or mx2 size?
Yes No
Solve by using equalizing expectation Is payoff matrix reduced to nxn matrix.
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method for mixed strategy Faculty of computing
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Two-Person

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