Lecture 6: Nash Equilibria in Mixed Strategies

Vera Sharunova

1 Television Programming Game

Recall our TV programming game from the previous lecture. CBS and NBC compete
for viewers by choosing to either run a sitcom, or a sports program. The numbers in the
cells represent the number of percentage points one of the networks is ahead or behind
the other network.

CBS
Sitcom Sports
−
Sitcom 12, -12 -6, 6|
NBC |
Sports -8, 8 -4, 4−

Finding MNE as Intersection of Best Responses

Q: What strategy would you play as an NBC executive? It depends on your beliefs about
CBS’s actions. Let’s start with a naive guess that it is equally likely that CBS chooses
to run a sitcom or a sports program. Let’s calculate the expected payoff (or utility) of
NBC from running a sitcom or a sports program under that belief.

EUNBC (Sitcom, 12 Sitcom + 12 Sports) = 12 · 12 + (−6) · 1

2
= 3.
EUNBC (Sports, 12 Sitcom + 21 Sports) = −8 · 12 + (−4) · 1
2
= −6.

Therefore, if NBC believes that CBS is equally likely to choose a sitcom or a sports
program, their best response is to run a sitcom.

Q: Is half-half a reasonable belief about CBS’s actions? No, because CBS will get a pos-
itive payoff if they opt for Sports, regardless of what NBC do, and get a very negative
payoff if they choose Sitcom and NBC chooses Sitcom. Therefore, it is unlikely that CBS
will choose to run a sitcom or a sports program with equal probability. Perhaps, CBS
will lean towards running a sports program. But again, exactly what belief should NBC
hold? We do not need to do expected payoff calculations for every single belief of NBC
about CBS’s actions, we can just plot expected payoffs from choosing Sitcom or Sports
as functions of beliefs about the actions of CBS. For example, let q denote the probability

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that CBS will pick a sitcom. This implies that CBS will pick a sports program with the
residual probability 1−q. Thus we are looking for EUNBC (Sitcom, qSitcom+(1−q)Sports)
and EUNBC (Sports, qSitcom + (1 − q)Sports).

As can be seen from Figure ??, NBC’s best response to CBS’s actions if their belief
q < q ∗ is to run a sports program since the expected payoff from doing so is greater
than that from running a sitcom. Graphically, the red line is everywhere above the blue
line in the q < q ∗ region. Similarly, NBC’s best response to CBS’s actions if their belief
q > q ∗ is to run a sitcom since the expected payoff from doing so is greater than that
from running a sports program. Graphically, the blue line is everywhere above the red
line in the q > q ∗ region. If NBC believe that CBS will run a sitcom with probability
q ∗ , they are indifferent between running a sitcom or sports program.

Q: How do we find the intersection point of the two lines? We need to write down the
equations for both lines, set them equal to each other, and solve for the resulting q ∗ .
First, find the functions that describe NBC’s expected payoffs from choosing either
Sitcom or Sports, given their belief q.

EUNBC (Sitcom, qSitcom + (1 − q)Sports) = 12q + (−6)(1 − q) = 18q − 6 (1)

EUNBC (Sports, qSitcom + (1 − q)Sports) = −8q + (−4)(1 − q) = −4q − 4 (2)

To find the q ∗ , set the two equations equal to each other.

18q − 6 = −4q − 4 =⇒ 22q = 2 =⇒ q ∗ = 1

11

Practice question. Now let’s put ourselves in the CBS’s shoes. Using the analysis above
as an example, graph the expected payoffs of CBS from choosing Sitcom or Sports as a
function of their belief about NBC’s actions, p. The solution is shown in Figure ??.

EUCBS (pSitcom + (1 − p)Sports, Sitcom) = −12p + 8(1 − p) = 8 − 20p (3)

EUCBS (pSitcom + (1 − p)Sports, Sports) = 6p + 4(1 − p) = 4 + 2p (4)

CBS is indifferent between running Sitcom or Sports if

8 − 20p = 4 + 2p =⇒ 4 = 22p =⇒ p∗ = 2
11

If p < p∗ , CBS’s best response is to run a sitcom. If p > p∗ , CBS’s best response is to
run a sports program.

Now we are ready to put it all together and find the mixed-strategy Nash equilibrium of
this game. In order to do this, we need to draw each TV network’s best responses as a
function of the opponents’ mixture between the two pure strategies (or beliefs about the

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probability of the opponent choosing a particular pure strategy). At the point where
the two best responses intersect, the two mixed strategies are simultaneously best re-
sponses to each other. This means that none of the TV networks wants to change their
mixture of pure strategies, so we would have found a mixed-strategy Nash equilibrium.
See Figure ??.

Notice that the two best-response functions do not intersect in the corners of our
1 × 1 probability square. This means that the game has no Nash equilibria in pure
2
strategies. However, it has one mixed-strategy Nash equilibrium, namely ( 11 Sitcom +
9 1 10
11
Sports, 11
Sitcom + 11
Sports).

Let us calculate the expected equilibrium payoffs for the two TV networks and put them
on Figures ?? and ??.

EU∗NBC = 12 · 2
11
· 1
11
−6· 2
11
· 10
11
−8· 9
11
· 1
11
−4· 9
11
· 10
11
≈ −4.36
EU∗CBS = −EU∗NBC ≈ 4.36
NB: In zero-sum games, you do not even need to write down the other player’s expected
payoff from scratch. You can just put a minus in front of the first player’s expected payoff.

Discussion: Why Focus on Particular Classes of Games?

You might be wondering why one should bother analyzing particular classes of games.
Besides illustrating possibilities of non-existence and multiplicity of Nash equilibria,
these examples are meant to build your intuition about the relationship between the
nature of the game and its expected outcome. Whenever you encounter an economic or
personal strategic situation that is characterized by perfectly or partially aligned inter-
ests among you and your opponents, you should immediately recall coordination games
and think about how to communicate with your counterparts. Whenever you encounter
a game that has a zero-sum flavor, think about how you should act to keep your oppo-
nents guessing.

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p = Pr(NBC picks Sitcom)

1
NBC’s best response

2 Mixed NE CBS’s best response

11

q = Pr(CBS picks Sitcom)

1 1
11
Figure 1: Best responses of NBC and CBS as a function of their beliefs about the
opponent’s actions.

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ECON3308.01: Game Theory in Economics Summer 2021

EUNBC EUNBC

12 EUNBC (Sitcom, Sitcom)

11

10

5 m
co
Sit

0 q = Pr(CBS picks Sitcom)

1
11
−1

−2

−3
EUNBC (Sports, Sports)
−4
-4.36
−5
Spo
rts
−6
EUNBC (Sitcom, Sports)
−7
EUNBC (Sports, Sitcom)
−8

Figure 2: Expected payoffs of NBC from choosing Sitcom or Sports as a function of their
belief about CBS’s actions.

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 ECON3308.01: Game Theory in Economics Summer 2021

EUCBS EUCBS

8 EUCBS (Sports, Sitcom)

6
s EUCBS (Sitcom, Sports)
Sport
5
4.36
4
EUCBS (Sports, Sports)
3

0 p = Pr(NBC picks Sitcom)

2
11
−1

−2

−3
Sit
co

−4
m

−5

−6

−7

−8

−9

−10

−11

−12 EUCBS (Sitcom, Sitcom)

Figure 3: Expected payoffs of CBS from choosing Sitcom or Sports as a function of their
belief about NBC’s actions.