Game Theory
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Rajasekar GGame Theory
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Rajasekar GUnit V Game Theory
A "game" refers to a strategic situation involving two or more decision-makers (players)
whose actions and outcomes are interdependent, where each player's payoff depends not
only on their own choices but also on the choices of the other players.
A player is called a competitor.
A strategy for a player is a plan which specifies his action for every possible action of
his opponent.
In a two person game if player I has ' ' strategies and player II has ' ' strategies then
the game is said to be a game.
If the number of strategies of the players are finite then the game is said to be a finite
game.
If atleast one of the players has infinite number of strategies, the game is said to be
infinite.
A game with two players wherein one person's gain is the loss of the other is called two
person zero sum game.
The pay offs corresponding to various strategies of the players are represented in a
matrix called the game matrix.
Note: It is conventional to write the pay off from the point of view of the player whose
strategies are associated with the rows of the matrix. In a zero sum game the pay off of
the other player are given by the negative of this matrix.
Pure strategy and mixed strategy : If the best strategy for each player is to play one
particular strategy throughout the game it is called pure strategy game.
On the other hand if the optimal plan for each player is to choose different strategies at
different situations the game is called a mixed strategy game.
Optional solution for two person zero sum game : The optional solution to a two
person zero sum game is obtained by minimax-maximin principle. According to this, the
player A (whose pay off are. represented by rows) select the strategy which maximizes his
minimum gain, the minimum being taken over all the strategies of the player . In a
similar way, player B selects his strategy which minimises his maximum loss.
Value of the game : It is the maximum guaranteed gain to the player or the
minimum possible loss to the player .
When the maximin value the minimax value then is called the value of the
game.
The pure strategies corresponding to the value of the game are called optional
strategies. The position in the pay off matrix corresponding to optional strategies is
called a saddle point.
A game with a saddle point in said to be strictly determinable.
Further, if the value of the game is zero then the game is said to be fair.
Rules for determining saddle point :
(1) select the minimum pay off in each row.
(2) select the maximum pay off in each column.
(3) If there appears in the pay off table a row minimum which is equal to the column
maximum, the position of this element is the saddle point. There can be more than
one saddle point in a game.
If a game has no saddle point, mixed strategies can be adopted to determine the value of
the game.
Dominance Rule
Rule 1: If the pay offs of the th row are less than or equal to those in the th row, th
row is dominated by the th row and hence omit the th row.
Rule 2: If the pay off of the th column are greater than or equal to those in the th
column, th column is dominated by the th column. Then omit the th column.
If a game can be reduced to a game using dominance then the game can be
solved using the mixed strategy method.
