Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 37 views

    What Is Game Theory?

    Uploaded by

    bkjha84
    Game theory is used to model competitive situations where multiple decision-makers have conflicting interests. There are a few key assumptions: 1) Players have well-defined choices, 2) Every combination of plays leads to a well-defined outcome, and 3) Players are rational and select choices that maximize their payoff. A zero-sum game is one where gains and losses of players always sum to zero. Payoff matrices represent the payments made at the end of the game. The maximin-minimax principles are used to determine optimal strategies.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd

    What Is Game Theory?

    Uploaded by

    bkjha84
    37 views10 pages
    Game theory is used to model competitive situations where multiple decision-makers have conflicting interests. There are a few key assumptions: 1) Players have well-defined choices, 2) Every combination of plays leads to a well-defined outcome, and 3) Players are rational and select choices that maximize their payoff. A zero-sum game is one where gains and losses of players always sum to zero. Payoff matrices represent the payments made at the end of the game. The maximin-minimax principles are used to determine optimal strategies.

    Original Description:

    Original Title

    Game Lecture1

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Game theory is used to model competitive situations where multiple decision-makers have conflicting interests. There are a few key assumptions: 1) Players have well-defined choices, 2) Every combination of plays leads to a well-defined outcome, and 3) Players are rational and select choices that maximize their payoff. A zero-sum game is one where gains and losses of players always sum to zero. Payoff matrices represent the payments made at the end of the game. The maximin-minimax principles are used to determine optimal strategies.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    37 views10 pages

    What Is Game Theory?

    Uploaded by

    bkjha84
    Game theory is used to model competitive situations where multiple decision-makers have conflicting interests. There are a few key assumptions: 1) Players have well-defined choices, 2) Every combination of plays leads to a well-defined outcome, and 3) Players are rational and select choices that maximize their payoff. A zero-sum game is one where gains and losses of players always sum to zero. Payoff matrices represent the payments made at the end of the game. The maximin-minimax principles are used to determine optimal strategies.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 10

    What is Game Theory?

    A Competitive game : A competitive situation with a finite number of competitors with conflicting interests and where the action of depends upon the actions taken by the other It is a contest which involve two or more decision makers , each of wants to win. Example : Advertising and marketing compaigns by competing business firms.

    Game theory: assumptions


    (1) Each decision maker has available to him two or more well-specified choices or sequences of choices.

    (2) Every possible combination of plays available to the players leads to a well-defined end-state (win, loss, or draw) that terminates the game.

    Game theory: assumptions (Cont)


    (3) All decision makers are rational; that is, each player, given two alternatives, will select the one that yields him the greater payoff.

    Strategy : The number of competitive actions (choices or alternatives) that are available for a player are called strategies to that player.
    Zero-Sum Game A game in which the payoffs for the players always adds up to zero is called a zero-sum game. Two person, Zero-sum game: Games with two players. The gain (loss) of one player is exactly equal to the loss (gain) of the other.

    Pay-off Matrix : Is a tabular representation of payments that should be made at the end of a game. N Person Game : A game involving n persons.

    Maximin-Minimax Principle: The maximum of minimum gains is maximin value of the game and corresponding strategy is the maximin strategy. In a similar way, the minimum of maximum losses will be called the minimax value of the game and the corresponding strategy is the minimax strategy.

    Saddle Point : A saddle point of a pay-off matrix is that position in the matrix where the maximum of row minima is equal to the minimum of the column maxima. The payoff at the saddle point is called the value of the game and the corresponding strategies are the pure strategies.

    Zero Sum Games


    Game theory assumes that the decision maker and the opponent are rational, and that they subscribe to the maximin criterion as the decision rule for selecting their strategy This is often reasonable if when the other player is an opponent out to maximize his/her own gains, e.g. competitor for the same customers. Consider: Player 1 with three strategies S1, S2, and S3 and Player 2 with four strategies OP1, OP2, OP3, and OP4.

    Zero Sum Games (Cont)


    OP1 S1 Player 1 S2 S3 Column maxima 12 5 3 12 Player 2 OP2 3 4 0 4 minimax OP3 9 6 6 9 OP4 8 5 7 8 Row Minima 3 4 0

    maximin

    Using the maximin criterion, player 1 records the row minima and selects the maximum of these (S2) Player 1s gain is player 2s loss. Player 2 records the column maxima and select the minimum of these (OP2).

    Zero Sum Games (Cont)


    The value 4 achieved by both players is called the value of the game The intersection of S2 and OP2 is called a saddle point. A game with a saddle point is also called a game with an equilibrium solution. At the saddle point, neither player can improve their payoff by switching strategies

    You might also like