Pure Strategy Nash Equilibria

Sanjay Singh

1
Department of Information and Communication Technology
Manipal Institute of Technology, MAHE
Manipal-576104, INDIA
sanjay.singh@manipal.edu
2
Centre for Artificial and Machine Intelligence (CAMI)
MAHE, Manipal-576104, INDIA

March 26, 2021

Sanjay Singh Pure Strategy Nash Equilibria

Module Objective

Nash equilibrium
Maxmin value
Minmax value
Maxmin strategy
Minmax strategy
Subgame perfect equilibrium

Sanjay Singh Pure Strategy Nash Equilibria

 Dominant strategy equilibria (SD,WD and VWD), if exists,
are desirable, however, they rarely exists because the
conditions to be satisfied are demanding
A DSE requires that each player’s strategy be a best
response strategy against all possible strategy choices of
other players
Nash equilibrium insist that each player’s strategy offers a
best response against the Nash equilibrium strategies of
other players

Definition (Pure Strategy)

A pure strategy defines a specific move or action that a player
will follow in every possible attainable situation in a game. Such
moves may not be random, or drawn from a distribution, as in
the case of mixed strategies

Sanjay Singh Pure Strategy Nash Equilibria

Nash Equilibrium

An outcome is called a pure Nash equilibrium provided

nobody can gain a higher payoff by deviating from the
strategy (move), when all other players stick to their
choices
A higher payoff for a player may be possible, but only if two
or more players change their strategy
An outcome, a combination of strategies, is a pure Nash
equilibrium if each strategy involved is the best response to
other strategies
A cell in the normal form is a pure Nash equilibrium if each
entry is marked as being the best response to other
strategies

Sanjay Singh Pure Strategy Nash Equilibria

Definition (Pure Strategy Nash Equilibrium)
Given a strategic form game Γ = hN, (Si ), (ui )i, the strategy
profile s∗ = (s∗1 , s∗2 , . . . , s∗n ) is called a pure strategy Nash
equilibrium of Γ if

ui (s∗i , s−i ) ≥ ui (si , s∗−i ) ∀si ∈ Si , ∀i = 1, 2, . . . , n.

Alternatively

ui (s∗i , s∗−i ) = max ui (si , s∗−i ) ∀i = 1, 2, . . . , n

si ∈Si

That is, each player’s Nash equilibrium strategy is a best

response to the Nash equilibrium strategies of other players.

Sanjay Singh Pure Strategy Nash Equilibria

Definition (Best Response Correspondence)

Given a strategic form game Γ = hN, (Si ), (ui )i, the best
response correspondence for player i is the mapping
i
bi : S−i 7→ 2S defined by

bi (s−i ) = {si ∈ Si : ui (si , s−i ) ≥ ui (s0i , s−i ) ∀s0i ∈ Si }.

That is, given a profile s−i of strategies of other players, bi (s−i )

gives the set of all best response strategies of player i.

The strategy profile (s∗1 , . . . , s∗n ) is a pure strategy Nash

equilibrium iff
s∗i ∈ bi (s∗−i ), ∀i = 1, 2, . . . , n

Sanjay Singh Pure Strategy Nash Equilibria

Example (Best Response Correspondence and PSNE)
B
A
2 4 5
2 10,10 14,12 14,15
4 12,14 20,20 28,15
5 15,14 15,28 25,25

Sanjay Singh Pure Strategy Nash Equilibria

Example (BOS Game)

Consider two player BOS game with following payoff matrix

2
1
A B
A 2,1 0,0
B 0,0 1,2

There are two Nash equilibria: (A,A), and (B,B)

Profile (A,A) is a Nash equilibrium because
u1 (A, A) = 2 > u1 (B, A) = 0, u2 (A, A) = 1 > u2 (A, B) = 0
Profile (B,B) is also a Nash equilibrium because
u1 (B, B) = 1 > u1 (A, B) = 0, u2 (B, B) = 2 > u2 (B, A) = 0
Best response sets are given by:
b1 (A) = {A}; b1 (B) = {B}; b2 (A) = {A}; b2 (B) = {B}
Since A ∈ b1 (A) and A ∈ b2 (A), (A,A) is a Nash equilibrium, and same
argument holds for (B,B)
Profile (A,B) is not a Nash equilibrium since A ∈
/ b1 (B); B ∈
/ b2 (A)

Sanjay Singh Pure Strategy Nash Equilibria

Example (Prisoner’s Dilemma)
Prisoner’s dilemma problem has the following payoff matrix

2
1
NC C
NC -2,-2 -10,-1
C -1,-10 -5,-5

Here profile (C,C) is a unique Nash equilibrium

We need to look at the best response sets:
b1 (C) = {C}; b1 (NC) = {C}; b2 (C) = {C}; b2 (NC) = {C}
(s∗1 , s∗2 ) is a pure strategy Nash equilibrium iff s∗1 ∈ b1 (s∗2 )
and s∗2 ∈ b2 (s∗1 )
Here, the only possible pure strategy Nash equilibrium is
(C,C)
Also, (C,C) is a strongly dominant strategy equilibrium

Sanjay Singh Pure Strategy Nash Equilibria

Given a strategic form game Γ = hN, (Si ), (ui )i, a strongly

(weakly or very weakly) dominant strategy equilibrium
(s∗1 , . . . , s∗n ) is also a Nash equilibrium
Intuition
In a dominant strategy equilibrium, the equilibrium strategy
of each player offers a best response irrespective of the
strategies of rest of the players
In a pure strategy Nash equilibrium, the equilibrium
strategy of each player offers a best response against the
Nash equilibrium strategies of rest of the players
Thus, Nash equilibrium is a much weaker notion of
equilibrium than a dominant strategy equilibrium
Also, a Nash equilibrium need not be a dominant strategy
equilibrium

Sanjay Singh Pure Strategy Nash Equilibria

 Example (Duopoly Pricing Game)
There are two companies 1 and 2 that wish to maximize their
profit by choosing their prices p1 and p2
The utilities of two companies are
u1 (p1 , p2 ) = (p1 − c)x1 (p1 , p2 )
u2 (p1 , p2 ) = (p2 − c)x2 (p1 , p2 )
Here, x1 (p1 , p2 ) and x2 (p1 , p2 ) represents the amount of
sale for the two companies
u1 (c, c) = u2 (c, c) = 0 and
u1 (c, c) ≥ u1 (p1 , c) ∀p1 ∈ S1 and
u2 (c, c) ≥ u2 (c, p2 ) ∀p2 ∈ S2
The strategy profile (c, c) is a pure strategy Nash
equilibrium
Intuition?

Sanjay Singh Pure Strategy Nash Equilibria

Tragedy of Commons

 
n−5 5X
ui (s1 , . . . , sn ) = si − sj (i = 1, 2, . . . , n)
n n
j6=i
When n < 5, (0, 0, . . . , 0) is a strongly dominant strategy
equilibrium
When n > 5, (1, 1, . . . , 1) is a strongly dominant strategy
equilibrium
5X
When n = 5, ui (0, s−i ) = ui (1, s−i ) = − si
n
j6=i
Thus, ui (0, s−i ) = ui (1, s−i ), ∀s−i ∈ S−i ∀i ∈ N
It implies that bi (s−i ) = {0, 1} ∀s−i ∈ S−i ∀i ∈ N
Here all the strategy profiles are Nash equilibrium

Sanjay Singh Pure Strategy Nash Equilibria

 If the government decides to impose a pollution tax of 5
units for each sheep kept, then we have
n
5X 5 5X
ui (s1 , . . . , sn ) = si − 5si − sj = −4si − si − sj
n n n
j=1 j6=i

5X 5 5X
ui (0, s−i ) = − sj , ui (1, s−i ) = −4 − − sj
n n n
j6=i j6=i
It implies that bi (s−i ) = {0} ∀i ∈ N
Hence, whatever be the value of n, profile (0, 0, . . . , 0) is a
strongly dominant strategy equilibrium

Sanjay Singh Pure Strategy Nash Equilibria

Bandwidth Sharing Game

Let xi be the amount of flow that player i(i = X 1, . . . , m) wish
to transmit on the channel and assume that xi < 1
 i∈N

X
Utility function, ui (x1 , . . . , xn ) = xi 1 −
 xj  ∀i ∈ N
j∈N
X
Consider player i and define, ti = xj
j6=i
Now, the payoff for player i is xi (1 − ti − xi )
To maximize the above payoff, we have to choose
∗
P
∗ 1 − ti 1 − j6=i xj
xi = arg max xi (1 − ti − xi ) = =
xi ∈[0,1] 2 2
If this has to be satisfied for all i ∈ N, then we have n
simultaneous equation
∗
P
∗
1 − j6=i xj
xi = ∀i ∈ N
2
Sanjay Singh Pure Strategy Nash Equilibria
The profile (x1∗ , . . . , xn∗ ) is a Nash equilibrium iff
ui (xi∗ , x−i
∗ ∗
) = max ui (xi , x−i ) ∀i ∈ N
xi ∈Si

The set of simultaneous equation has a unique solution,

1
xi∗ = ∀i ∈ N
1+n
1 1
The profile ( ,..., ) is a Nash equilibrium
1+n 1+n
The payoff for player i in the above Nash equilibrium is given by
!
X
ui (x1 , . . . , xn ) = xi 1 − xj ∀i ∈ N
j∈N
  X !
1 1
= 1−
1+n j∈N
1+n
  
1 n
= 1−
1+n 1+n
  
1 1+n−n
=
1+n 1+n
  
1 1
=
1+n 1+n
Sanjay Singh Pure Strategy Nash Equilibria

n
The total payoff to all players combined is
(1 + n)2
1 1
Now lets consider a non-equilibrium profile , . . . ,
2n 2n
With such a profile each player gets a payoff
1  n 1
1− =
2n 2n 4n
1 n
The total payoff for all the players = >
4 (1 + n)2
Thus a non-equilibrium profile provides higher payoff than
a Nash equilibrium payoff
In general, like in the PDP, the equilibrium payoffs may not
be the best possible outcome for the players individually or
collectively or both
It is a limitation that Nash equilibrium payoff suffers often

Sanjay Singh Pure Strategy Nash Equilibria

 Games with multiple pure Nash equilibrium are called
coordination games, since if pre-game negotiations are
allowed, the players have to agree on one of them
When there are multiple PSNE, which Nash equilibrium is
the best?
A Nash equilibrium is Pareto-dominated by another Nash
equilibrium if every player’s payoff in the first one is smaller
or the same in the second Nash equilibrium
A Nash equilibrium is Pareto-optimal if it is not
Pareto-dominated by any other Nash equilibrium, except
by some having exactly the same payoffs

Sanjay Singh Pure Strategy Nash Equilibria

Interpretation of Nash Equilibrium

A Nash equilibrium (NE) is a profile of strategies of the n

players, such that each player’s choice is the player’s best
response given that rest of the player play their NE
strategies
By deviating from a NE strategy, a player will not better of
given that other player do not deviate from their NES

Sanjay Singh Pure Strategy Nash Equilibria

Interpretation of Nash Equilibrium:Prescription

An adviser to n player would prescribe a NE strategy

profile to players
If adviser recommends strategies that do not constitute a
NE, then at least one player is better off doing differently
than advised
If adviser prescribes strategies that constitute a NE, then
players are happy because playing the prescribed strategy
is best under the assumption that other player will play
their prescribed strategies
Hence, a logical and rational, adviser would recommend a
NE profile to players
Caveat: NE is an insurance against only unilateral
deviations
If two or more player deviating might result in higher payoff
than the NE payoffs
Sanjay Singh Pure Strategy Nash Equilibria

Interpretation of Nash Equilibrium:Prediction

If players are rational and intelligent, then a NE provides

one possible, and scientific prediction for the game
For example, a systematic elimination of strongly
dominated strategies will lead to a reduced form that will
include a NE
Often, IESD leads to a unique prediction which would be a
NE

Sanjay Singh Pure Strategy Nash Equilibria

Interpretation of Nash Equilibrium:Self-enforcing
agreement

A NE can be viewed as an implicit or explicit agreement

between the players
Once this agreement is reached, it does not need any
external means of enforcement because it is in self-interest
for each player to follow the agreement if others do
In a non-cooperative game, agreements cannot be
enforced, NE agreements are desirable in the sense of
being sustainable under the assumption that only unilateral
deviations are possible

Sanjay Singh Pure Strategy Nash Equilibria

Maxmin Values and Maxmin Strategy

Notion of maxmin strategy of a player looks at the best payoff the player
can gurantee herself even in the worst case when the other players are
free to choose any strategy
2
1
A B
A 4,1 0,4
B 1,5 1,1
This game does not have PSNE
If player 1 chooses strategy A, the minimum payoff he could get is 0
(when 2 chooses B)
If player 1 chooses B, the minimum he could get is 1 (when 2 chooses
either A or B)
Player 1 decide to play strategy B and he is guaranteed to get minimum
payoff of 1, regardless of strategy played by 2
This payoff (i.e., 1) is called maxmin value (security value) and the
strategy which assures him this value is called maxmin strategy
(security strategy)
What is maxmin strategy for player 2?
Sanjay Singh Pure Strategy Nash Equilibria
 Given a SFG, Γ = hN, (Si ), (ui )i, if player i chooses strategy
si , then the minimum payoff for this player would be

min ui (si , s−i )

s−i ∈S−i

Player i can choose a strategy in Si that would maximize

the above to obtain a payoff that he is guaranteed to obtain,
irrespective of the strategy adopted by rest of the players
Definition (Maxmin Value and Maxmin Strategy)
Given a SFG, Γ = hN, (Si ), (ui )i, the maxmin value or security
value of a player i is given by

vi = max min ui (si , s−i ).

si ∈Si s−i ∈S−i

Any strategy s∗i ∈ Si that guarantees this payoff to player i is

called a maxmin strategy or security strategy of player i.

Sanjay Singh Pure Strategy Nash Equilibria

vi = max min ui (si , s−i ) means

si ∈Si s−i ∈S−i
Mark minimum entry in each row, and circle the maximum
of these row minima (aka maxmin)
vi = min max ui (si , s−i ) means
s−i ∈S−i si ∈Si
Mark maximum entry in each column, and circle the
minimum of these column maxima (aka minmax)

A B C D Rmin
A 4 3 2 5 2 ← maxmin
B -10 2 0 -1 -10
C 7 5 2 3 2 ← maxmin
D 0 8 -4 -5 -5
Cmax 7 8 2 ↑ minmax 5

Sanjay Singh Pure Strategy Nash Equilibria

 A player may have multiple maxmin strategies
If a player i plays maxmin strategy and other player play
arbitrarily, then player i is always guaranteed a payoff that
is no less than vi
Maxmin strategy is also called as no-regret strategy
In contrast, the Nash equilibrium strategy is not necessarily
a no-regret strategy for a given player
In NE, other players deviating from their equilibrium
strategies can cause the payoff of the player to be become
less than his payoff in the equilibrium
Payoff of a player in Nash equilibrium profile (if one exists)
is at least the maxmin value of the player

Sanjay Singh Pure Strategy Nash Equilibria

Proposition
Suppose a strategic form game Γ = hN, (Si ), (ui )i has a pure
strategy Nash equilibrium (s∗1 , . . . , s∗n ), then

ui (s∗1 , . . . , s∗n ) ≥ vi ∀i ∈ N

Proof.
We note that ∀i ∈ N,

ui (s∗1 , . . . , s∗n ) = max ui (si , s∗−i )

si ∈Si

We also know that ∀i ∈ N,

ui (si , s∗−i ) ≥ min ui (si , s−i )

s−i ∈S−i

Combining the above two inequalities, it is clear that

∀i ∈ N, ui (s∗1 , , . . . , s∗n ) ≥ vi

Sanjay Singh Pure Strategy Nash Equilibria

Minmax Value and Minmax Strategy

The minmax value of a player i is the lowest payoff that can

be forced on player i when other players choose strategies
that hurt player i the most, and defined as
Definition (Minmax Value and Minmax Strategy)
Given a strategic form game, Γ = hN, (Si ), (ui )i, the minmax
value of a player i(i = 1, . . . , n) is given by

vi = min max ui (si , s−i ).

s−i ∈S−i si ∈Si

Any strategy profile s∗−i ∈ S−i of the players that forces the
payoff vi on player i is called a minmax strategy profile (of the
rest of the player) against player i.

Sanjay Singh Pure Strategy Nash Equilibria

2
1
A B
A 4,1 0,4
B 1,5 1,1

Suppose we want to compute the minmax value of player 1

If player 2 plays A, the maximum that player 1 could get is
4 (by playing strategy A)
If player 2 plays B, the maximum that player 1 could get is
1 (by playing B)
Thus if player 2 plays B, player 1 is forced to get a
maximum payoff of 1, so the minmax value of player 1 is 1
The minmax strategy of player 2 against player 1 is B
What is the minmax value of player B and strategy of
player 1 against player 2?

Sanjay Singh Pure Strategy Nash Equilibria

 Minmax value of a player i is such that other players can
guarantee that player i cannot receive more than the
minmax value
It is indicative of the maximum resistance that player i can
offer when the other players choose their strategies to hurt
him the most
On contrary, the maxmin value of player i is the minimum
payoff a player can guarantee himself of receiving
Intuitively, the minmax value of a player must be greater
than or equal to the maxmin value of that player

Sanjay Singh Pure Strategy Nash Equilibria

Proposition
Consider a strategic form game Γ = hN, (Si ), (ui )i. Then

vi ≥ vi ∀i ∈ N.

Proof.
Suppose s∗−i is a minmax strategy against player i. This means

vi = max ui (si , s∗−i ) ∀i ∈ N.

si ∈Si

Note ∀i ∈ N that

ui (si , s∗−i ) ≥ min ui (si , s−i ) ∀si ∈ Si

s−i ∈S−i

Using the above two inequalities, we get

vi = max ui (si , s∗−i ) ≥ max min ui (si , s−i ) = vi ∀i ∈ N.

si ∈Si si ∈Si s−i ∈S−i

Thus the minmax value of a player is no less than his maxmin value.

Sanjay Singh Pure Strategy Nash Equilibria

 Proposition
Suppose a strategic form game Γ = hN, (Si ), (ui )i has a pure strategy Nash
equilibrium (s∗1 , . . . , s∗n ). Then

ui (s∗1 , . . . , s∗n ) ≥ vi ∀i ∈ N.

Proof.
First, we note that ∀i ∈ N,

ui (s∗1 , . . . , s∗n ) = max ui (si , s∗−i ).

si ∈Si

And max ui (si , s∗−i ) ≥ min max ui (si , s−i ) ∀i ∈ N.

si ∈Si s−i ∈S−i si ∈Si

From the above arguments, it is clear that ui (s∗1 , . . . , s∗n ) ≥ vi ∀i ∈ N.

The payoff of a player in a pure strategy Nash equilibrium (if one exists) is
greater than or equal to the minmax value of the player which in turn is
greater than or equal to the maxmin value of the player

Sanjay Singh Pure Strategy Nash Equilibria

Equilibria in Extensive Form Game

Definition (Subgame)
Given an extensive form game Γ and a non-terminal history h, the
subgame following h is the part of the game that remains after the
history h has occurred.

Figure 2: Subgame of entry game

Sanjay Singh corresponding
Pure Strategy Nash to history (in)
Equilibria
Figure 1: Entry game
 Figure 3: Game tree and its two subgames with history (C) and history (C,E)

Sanjay Singh Pure Strategy Nash Equilibria

Pure Strategy Nash Equilibria in EFG

Notion of PSNE for EFG follows immediately through SFG

representation of EFG
Definition
Given an extensive form game Γ = hN.(Ai ), H, P, (Ii ), (ui )i, a
strategy profile s∗ = (s∗1 , . . . , s∗n ) is called a pure strategy Nash
equilibrium if ∀i ∈ N

ui (O(s∗i , s∗−i )) ≥ ui (O(si , s∗−i )) ∀si ∈ Si

where Si is the set of all strategies of player i(i = 1, . . . , n) and

O(.) denotes the outcome corresponding to a strategy profile.

Sanjay Singh Pure Strategy Nash Equilibria

 2
1
accept fight
in 2,1 0,0
out 1,2 1,2

There are two PSNE in this

game
Player 1 would prefer
equilibrium (in, accept)
Player 2 would prefer
equilibrium (out,fight)
PSNE in EFG ignores the
sequential structure of
EFG
Figure 4: Entry game
NE simply treats strategies
as choices made once and
for all before play begins
Sanjay Singh Pure Strategy Nash Equilibria

2
1
E F
CG 1,2 3,1
CH 0,0 3,1
DG 2,0 2,0
DH 2,0 2,0

There are three PSNE in this

Figure 5: Entry game game: (CH,F),(DG,E), and
(DH,E)

Sanjay Singh Pure Strategy Nash Equilibria

Subgame Perfect Equilibrium (SGPE)

Notion of SGPE takes into account every possible history

in the game
Ensures that each player’s strategy is optimal given the
strategies of other players, not only at the start of game but
after every possible history

Definition (Subgame Perfect Equilibrium)

Given an extensive form game Γ = hN.(Ai ), H, P, (Ii ), (ui )i, a
strategy profile s∗ = (s∗1 , . . . , s∗n ) is an SGPE if ∀i ∈ N,

ui (Oh (s∗i , s∗−i )) ≥ ui (Oh (si , s∗−i )) ∀h ∈ {x ∈ sH : P(x) = i}; ∀si ∈ Si

where Oh (s∗i , s∗−i ) denotes the outcome corresponding to the

history h in the strategy profile (s∗i , s∗−i ).

Sanjay Singh Pure Strategy Nash Equilibria

Equilibria in Extensive Form Game

2
1
accept fight
in 2,1 0,0
out 1,2 1,2

There are two PSNE, but

(out,fight) is not an SGPE
because action ”fight” is
not optimal for player 2 in
the subgame
corresponding to history
(in)
Rationale is that in case
challenger (P2) deviates
Figure 6: Entry game from (out, fight) and plays
”in” then P2 is at a
Sanjay Singh
disadvantage
Pure Strategy Nash Equilibria
NE and SGPE

SGPE is a strategy profile that induces a NE in every

subgame of the game
An SGPE is always a NE whereas converse is not true
In a NE of an EFG, each player’s strategy is optimal given
the strategies of other players in the whole game
It may not be optimal in every subgame
It will be optimal in any subgame that is reached when
players follow the Nash equilibrium strategies

Sanjay Singh Pure Strategy Nash Equilibria

An sGPE is such that each player’s strategy is optimal in

every possible history that may or may not occur if the
players follow their strategies
In NE, each player has long experience of playing with
other players and has correct belief about the action of the
other players
He believes they will not deviate from these actions and
given these beliefs of wisdom, NE strategy is optimal
A SGPE does not make such assumptions about actions of
other players
SGPE takes into account the possibility of each player
deviating from SGPE actions
Each player forms correct belief about other player’s
strategies and know how SGPE provides superior
insurance against deviation by other players than a NE

Sanjay Singh Pure Strategy Nash Equilibria