Compiled by Rajesh Devasia

rajdevasia@gmail.com
+91 9819903380

Game: is a contest involving 2 or more

persons/decson makers, each of whom wants
to win
Game Theory: is concerned with the study of
decsion making in situations where 2 or more
rational opponents are involved under
conditions of competition and conflicting
interest
Strategy: is an alternative course of action
available to a player in advance, by which he
selects the course of action to be adopted.

Pure strategy: If a player selects the same

strategy each time, it is called pure strategy.
In this case, each player knows what the
other player would do against his selected
strategy
Mixed strategy: when the players use a
combination of strategies and each player
leaves the other player guessing as to what
he would do, incase the other adopts a
certain strategy. In this case it is a
probabilistic situation with the aim of
optimization

Optimal strategy: relates to a course of

action when the player remains in the most
preferred position regardless of the action of
his competitors.
Pay-off: a quantitative measure of
achievement, as a dfefinite gain or profit or
money or market share, that a player
achieves or hopes to achieve at the end of
the game is called Pay-off or outcome.
Value of the game: The expected outcome of
the game when players follow their optimal
strategies.

2 player, zero sum game: Gain of one player

= loss of the other player. Here the
maximising player maximises his gain, while
minimising player minimises his losses
Saddle point: is a point of equilibrium of payoff matrix where maximum of row minima
coincides with minimum of column maxima.
The pay-off at saddle point is called the
value of the game

DP1 or Rule of rows: If all the elements of a row

are less than or equal to the corresponding
elements in another row, this row is said to be
dominated by the other row and can be deleted
from the matrix.
DP2 or Rule of columns: If all the elements of a
column are greater than or equal to the
corresponding elements in another column, then
the column is said to be dominated by the other
column and can be deleted from the matrix.
DP3 or Rule of averages: A pure strategy may be
dominated if it is inferior to average of 2 or more
pure strategies.

2 X 2: Algebraic/Arithmetic method

2 X n or m X 2: Graphical method

M X n: Linear programming method

Numerical cases