Game Theory

Session 12
Mrs. Dhanya Anna Kurian
Mathematical Tool that helps to study strategic
situations in which players optimize a variable
not only on the basis of their own preferences,
ut also o other players’ de isio .
 Assumptions:
For selecting an optimum strategy in the face of
opponents who have their own strategies:
1. Each player have 2 or more choices or sequence
of choices
2. The end is win, lose or draw
3. A specific pay off is associated with each player
4. All have perfect knowledge about the game
5. All players are rational
 Structure
• Players
• Strategy
• Strategic Profile
• Payoff
• Matrix
 Pay off matrix
• Given the strategies of all the players in a
game, payoff matrix will represent a set of
outcomes for the game.

• Maxmin Strategy (Maximise the worst case

pay off for them)

• Minmax Strategy (Minimise the best payoff of

the opponent)
 TONE
Advertise Do Not Advertise
RING
Advertise (60,10)
(50, 20)
Do Not Advertise (40, 30) (55, 25)
 Priso er’s Dile a
Prisoner B
Stays Silent Confesses
Prisoner A
Stays Silent A serves 10. B
Both serves 2 years serves 1
Confesses A serves 1. B serves Both serves 5 years
10