GAME THEORY

Game theory is a body of knowledge that deals with making decisions when two or more intelligent and rational opponents are
involved under conditions of conflict or competition. Game theory is study of how to mathematically determine the best strategy
for given conditions in order to optimize the outcome.

ASSUMPTIONS IN GAME THEORY:

Rationality: The players act rationally & intelligently.
Optimization of Utility: The players always try to maximize their profits or minimize their losses.
Finite Strategies: Each player has finite number of strategies.
Known payoffs: Each player knows payoffs in advance for every combination of alternative strategies.
Free Flow of Information: All relevant information is known to each player.
Simultaneous adoption of Strategies: Player chooses their strategies simultaneously.

GAME THEORY: GAME THEORY MODEL &SOME DEFINITIONS

A game has the following Properties:
◼ There is finite no. of players.
◼ Each player has finite no of strategies to opt.
◼ A play of game takes place when each player employs his strategy.
◼ Every game results in a payoff to some player.
The games can also be classified on the basis of the number of strategies. A game is said to be finite if each player has the option
of choosing from only a finite number of strategies otherwise it is called infinite.

PLAYERS:are competitive decision makers, involved in the game. A game involving two players is referred to as a “Two-person
game”. However if the number of players is more (say n>2) then the game is called an n-person game.

STRATEGY:In a game situation, each of the players has a set of strategies available. The Strategy for a player is the set of alternative
courses of action that he will take for every payoff (outcome) that might arise. Strategy may be of two types:
◼ Pure strategy
◼ Mixed Strategy
Pure strategy: If the players select a particular strategy each time on surety basis, then it is referred as pure – strategy. In this case
each player knows exactly what the opponent is going to do and the objective of the players is to maximize gains or to minimize
losses.
Mixed Strategy: When the players use a combination of strategies with some fixed probabilities and each player kept guessing as
to which course of action is to be selected by the other player at a particular occasion then this is known as mixed strategy.
PAYOFFS: Payoffs are quantifiable favorable or unfavorable outcomes resulting from choosing a particular course of action or a
particular strategy.
PAYOFF MATRIX: Payoff Matrix is an array representing payoff for each possible combination of strategies which may be adopted
by competing players.

A SIMPLIFIED GAME THEORY MODEL CAN BE REPRESENTED AS FOLLOWS:

If Player A has m strategies represented as A1, A2, -------- , Am and player B has n strategies represented by B1, B2, ------- ,Bn. Then
the total number of possible outcomes is m x n. Here it is assumed that each player knows not only his own list of possible courses
of action but also those of his opponent. It is assumed that player A is always a gainer whereas player B a loser. Let a ijbe the payoff
which player A gains from player B if player A chooses strategy i and player B chooses strategy j.
The above situation can be represented schematically as follows:
Player B’s Strategies
Payoff Matrix for A
B1 B2 ------- Bj ------- Bn
Page1

A1a11 a12 ------- a1j ------- a1n

A2a21 a22 ------- a2j ------- a2n
Player A’ s

. . . .
Strategies

. . . .
Ai ai1 ai2 ------- aij ------- ain
. . . .
. . . .
Am am1 am2 ------- amj ------- amn
By convention, the rows of the payoff Matrix denote player A’s strategies and the columns denote player B’s strategies. Since
player A is assumed to be the gainer always so he wishes to gain a payoff aijas large as possible and B tries to minimize the same.

By PashupatiNathVerma
 GAME THEORY
MAXIMIN-MINIMAX PRINCIPLE
The objective of the game theory is to know how the competing players select their respective strategies so that they could
optimize their payoff. Such a decision making criterion is referred to as the minimax – maximin principle.

For player A, minimum value in each row represents the least gain to him irrespective of competitor strategy. Thus, A must select
the strategy that maximizes his minimum gain. This choice of player A is called the maximin criterion and the corresponding gain
is called the maximin value of the game.

For player B, maximum value in each row represents the greatest loss to him irrespective of competitor strategy. Thus, B must
select the strategy that minimizes his maximum loss. This choice of player B is called the minimax criterion and the corresponding
gain is called the minimax value of the game.

If the maximin value equals the minimax value, then the game is said to have a saddle point and the corresponding strategies are
called optimal strategies.

SADDLE POINT / EQUILIBRIUM POINT:A saddle point in a game theory is a point of

equilibrium where competing players settle down there competing situation by
adopting some appropriate course of action. A saddle point of a payoff matrix can
be obtained by locating the position in the matrix where the maximum of the row
minima is equal to the minimum of the column maxima.

VALUE OF GAME: It is the expected pay off of the play when all players of the game
follow their optimal strategies. The game is called fair if the value of game is zero
and unfair if it is non-zero. In case of pure strategies, the pay off at the saddle point represents the value of the game.

OPTIMAL STRATEGY: A strategy which when adopted puts the player in the most preferred position, irrespective of the strategy
of his competitors is called an optimal strategy. The optimal strategy involves maximal pay-off to the player.

DOMINANT STRATEGY: A strategy is said to be dominant if each payoff in the strategy is superior to each corresponding payoff
of a specific alternative strategy.

PRINCIPLE OF DOMINANCE:
Sometimes, one of the strategies of either player may be inferior to at least one of the remaining ones. The superior strategies
are said to dominate the inferior ones. This property of dominance is used reduce the size of payoff matrix hence to reach a
solution more easily.
Rules of dominance
◼ When the elements of a row (say kth) are less than or equal to the elements of another row (say rth) then rth row is said
to dominate kth row and the lesser row (i.e. kth row) may be omitted to reduce pay off matrix.
◼ When the elements of a row are less than or equal to the average elements of another two rows, then that lesser row is
omitted.
◼ When the elements of a column are greater than or equal to the elements of another column then that greater column
may be omitted.
◼ When the elements of a Column are Greater than or equal to the average elements of another Column, then that Greater
column is omitted.
TYPES OF GAMES
Zero-Sum Games A game situation in which one or more players gain result from equivalent losses of other players
and thus the net change in total wealth among players is zero is known as Zero Sum Games.
e.g. a competitive situation for gaining market share of a product is a Zero Sum Game.
 The games in which sum of the payoffs remains constant during the course of the game is known
as Constant-Sum Games.
 Generally, two sides in conflict.
 Being well informed always helps a player.
Games of Perfect  The information concerning an opponent’s move is well known in advance.
Information  All sequential move games are of this type.
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Games with  Partial or no information concerning the opponent is given in advance to the player’s decision.
Imperfect  Imperfect information may be diminished over time if the same game with the same opponent
Information is to be repeated.
Two Person Zero A game which involves only two players, say player A and player B, and where the gains made by one
Sum games equals the loss incurred by the other is called a two person zero sum game.
For example,
If two chess players agree that at the end of the game the loser would pay Rs 50 to the winner then it
would mean that the sum of the gains and losses equals zero. So it is a two person – zero sum game.

By PashupatiNathVerma
 GAME THEORY

SOLVING GAME WITH SADDLE POINT

Step1:Locate the lowest payoff in each row; draw “O” on that number.
Step2:Locate the highest payoff in each column, draw “□” on that number
Step3:If there is “□” and ‘O” on a particular payoff. Then those Combination strategies will represent Saddle Point that payoff will
be the value of game.

ILLUSTRATION1: Suppose there are two players A and B with following payoff matrix.
B1 B2 B3 B4
A1 20 15 12 35
A2 25 14 8 10
A3 40 2 10 5
A4 -5 4 11 0
SOLUTION: Let us denote row minima by and column maxima by
B1 B2 B3 B4 Row Maximin Value
Minima
A1 20 15 12 35 12
A2 25 14 8 10 8
Minimax Value
A3 40 2 10 5 2
A4 -5 4 11 0 -5
Col. 40 15 12 35
Maxima
Clearly MaxiMin Value=MiniMax Value=12 for A1 strategy of A and B3 strategy of B; thus saddle point is (A1, B3) and value of game
= 12.
Note that A1and B3ispure strategies of player A & B i.e. a rationale player surely adopt these strategies under given conditions.

ILLUSTRATION2:Solve the following game whose payoff is given by:

B1 B2 B3 B4
A1 1 7 3 4
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A2 5 6 4 5
A3 7 2 0 3
SOLUTION: Let us denote row minima by and column maxima by
B1 B2 B3 B4
A1 1 7 3 4
A2 5 6 4 5
A3 7 2 0 3

Row minima= Column maxima=4 for A2& B3strategy are equilibrium strategy. Thus (A2, B3) is saddle point and 4 is value of game.

By PashupatiNathVerma
 GAME THEORY
SOLVING REDUCED GAME WITHOUT SADDLE POINT:
After using the principle of dominance we come across one of the following situation with reduced payoff matrix:
◼ 2x2 Payoff matrix (Arithmetic Method)
◼ 2xn Payoff matrix (Graphical Method/ Arithmetic Method)
◼ mx2 Payoff matrix (Graphical Method/ Arithmetic Method)
◼ nxn Payoff matrix (Oddment Method)
◼ mxn Payoff matrix (LPP Method)
SOLVING 2*2 GAME WITHOUT SADDLE POINT
For any 2*2 two-person zero-sum game without saddle point having the payoff matrix for player A
Player B
a a 
Palyer A  11 12 
 a21 a22 
the optimum mixed strategies
A A2  B B2 
SA =  1  and S B =  1
 p1 p2   q1 q2 
and value of games will be given by
𝑎22 − 𝑎21 𝑎11 − 𝑎12
𝑝1 = 𝑎𝑛𝑑 𝑝2 =
𝑎11 + 𝑎22 − (𝑎12 + 𝑎21 ) 𝑎11 + 𝑎22 − (𝑎12 + 𝑎21 )
𝑎22 − 𝑎12 𝑎11 − 𝑎21
𝑞1 = 𝑎𝑛𝑑 q2 =
𝑎11 + 𝑎22 − (𝑎12 + 𝑎21 ) 𝑎11 + 𝑎22 − (𝑎12 + 𝑎21 )
𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝐺𝑎𝑚𝑒𝑠
𝑎11 𝑎22 − 𝑎12 𝑎21
𝑣=
𝑎11 + 𝑎22 − (𝑎12 + 𝑎21 )

For column player, column strategy 3 is inferior to both column strategy 1 and column strategy 2 so the game reduces to
1 2
[ ]
2 0

As the saddle point does not exists, so let us denote the mixed strategies of row player with their corresponding
probabilities as

𝑺𝑹 = (𝒑𝟏 𝒑𝟐 )

Then p1 and p2 will be given by

Page4

By PashupatiNathVerma
 GAME THEORY
ILLUSTRATION 3: Find the value of game from given payoff:
H T
H 10 -3
T -3 0
SOLUTION: Letus try to find out saddle point
H T Row
Minima
H 10 -3 -3
T -3 0 -3
Column
10 0
Maxima
SinceMaxiMinValue≠MiniMax Value thus saddle point does not exists.
Value of game will be given by
𝑎11 𝑎22 − 𝑎12 𝑎21 10 ∗ 0 − (−3) ∗ (−3) 9
𝑣= = =
𝑎11 + 𝑎22 − (𝑎12 + 𝑎21 ) 10 + 0 − (−3 − 3) 16
Further, as this case there does not exists any saddle point, thus the player will adopt mixed strategies. Let us
denote the mixed strategies with their corresponding probabilities as
H T  H T
SR =   and SC = 
 pH pT   qH qT 
The above probabilities can be calculated as

a22 − a21 0 − (−3) 3 3 13

pH = = = and pT = 1 − pH = 1 − =
a11 + a22 − (a12 + a21 ) 16 16 16 16
a22 − a12 0 − (−3) 3 3 13
qH = = = and qT = 1 − qH = 1 − =
a11 + a22 − (a12 + a21 ) 16 16 16 16
Thus, optimum mixed strategies for row ^& column players are

 H T   H T 
SR =   and SC =  
3 /16 13 /16  3 /16 13 /16 

SOLUTION:
Page5

Let us try to find out saddle point

Run Defense Pass Defense Row Minima

Run Offence 1 8 1
Pass Offence 10 0 0
Column Maxima 10 8

Maximin Value =Maximum of Row Minima=Max(1,0)=1

By PashupatiNathVerma
 GAME THEORY
Minimax Value=Minimum od Column Maxima=Min(10,0)=0

Since MaxiMin Value ≠ MiniMax Value hence saddle point does not exist and mixed strategies would be adopted by the players.

Further, as this case there does not exists any saddle point, thus the player will adopt mixed strategies. Let us denote the mixed
strategies with their corresponding probabilities as

𝑅𝑢𝑛 𝑂𝑓𝑓𝑒𝑛𝑠𝑒 𝑃𝑎𝑠𝑠 𝑂𝑓𝑓𝑒𝑛𝑠𝑒

𝑆𝑂𝐹𝐹 = [ ]
𝑃𝑅𝑂 𝑃𝑃𝑂
𝑆

𝑅𝑢𝑛 𝐷𝑒𝑓𝑒𝑛𝑠𝑒 𝑃𝑎𝑠𝑠 𝐷𝑒𝑓𝑒𝑛𝑠𝑒

𝑆𝐷𝐸𝐹 = [ ]
𝑃𝑅𝐷 𝑃𝑃𝐷

The above probabilities can be calculated as

𝑎22 − 𝑎21 0 − 10 10 10 7
𝑃𝑅𝑂 = = = 𝑎𝑛𝑑 𝑃𝑃𝑂 = 1 − 𝑃𝑅𝑂 = 1 − =
(𝑎11 + 𝑎22 ) − (𝑎12 + 𝑎21 ) (1 + 0) − (8 + 10) 17 17 17
𝑎22 − 𝑎12 0−8 8 8 9
𝑃𝑅𝐷 = = = 𝑎𝑛𝑑 𝑃𝑃𝐷 = 1 − 𝑃𝑅𝐷 = 1 − =
(𝑎11 + 𝑎22 ) − (𝑎12 + 𝑎21 ) (1 + 0) − (8 + 10) 17 17 17

Note thar aij denotes payoff of row player for ith strategy og row player and jth strategy of column player.

And

Value of game will be given by

𝑎11 𝑎22 − 𝑎12 𝑎21 1 ∗ 0 − 8 ∗ 10 80
𝑣= = =
(𝑎11 + 𝑎22 ) − (𝑎12 + 𝑎21 ) (1 + 0) − (8 + 10) 17

Thus, equilibrium condition for mixed strategies for offence & Defense players are
Offense player mixed Strategy

𝑅𝑢𝑛 𝑂𝑓𝑓𝑒𝑛𝑠𝑒 𝑃𝑎𝑠𝑠 𝑂𝑓𝑓𝑒𝑛𝑠𝑒

𝑆𝑂𝐹𝐹 = [ ]
10/17 7/17

Défense player mixed Strategy

𝑅𝑢𝑛 𝐷𝑒𝑓𝑒𝑛𝑠𝑒 𝑃𝑎𝑠𝑠 𝐷𝑒𝑓𝑒𝑛𝑠𝑒

𝑆𝐷𝐸𝐹 = [ ]
8/17 9/17

Value of game
v=80/17

ILLUSTRATION 4:Two breakfast food manufacturers, ABC & XYZ are competing for an increased market share. The payoff matrix,
shown in the following table, describes the increase in market share for ABC & decrease in market share of XYZ.
XYZ
GiveCoupons DecreasePrice Maintain Present Strategy Increase Advertising
Give Coupons 2 -2 4 1
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Decrease Price 6 1 12 3
ABC

Maintain Present
-3 2 0 6
Strategy
Increase Advertising 2 -3 7 1
Determine the optimal strategies for both the manufacturers and the value of the games.
SOLUTION:
Finding Saddle Point
Let us denote row minima by and column maxima by

By PashupatiNathVerma
 GAME THEORY
XYZ
Give Coupons Decrease Price Maintain Present Strategy Increase Advertising
ABC Give Coupons 2 -2 4 1
Decrease Price 6 1 12 3
Maintain Present Strategy -3 2 0 6
Increase Advertising 2 -3 7 1

Clearly, for any combination strategies of ABC & XYZ Row Minima≠Column Maxima. Thus,Maximin Value ≠ Minimax Value and
hence saddle point does not exists.
Reducing the size of the game:
As the saddle point does not exist, let us try to reduce the size of the matrix using dominance property as below:
1. ABC’s “Increase Advertising” is dominated by its “Decrease price” strategy (as “Decrease price” strategy are better than
“Increase Advertising” payoffs), similarly ABC’s “Give Coupons” Strategy is also dominated by its “Decrease price”
strategy so we can omit ABC’s “Increase Advertising” strategy and “Give Coupons” Strategy from the game to reduce it
which results in
XYZ
Give Coupons Decrease Price Maintain Present Strategy Increase Advertising
ABC

Decrease Price 6 1 12 3
Maintain Present Strategy -3 2 0 6

2. XYZ’s “Give coupons” strategy is dominating its “Maintain present Strategy” (as 6<12 & -3<0) so we can omit XYZ’s
“Maintain present Strategy”. Similarly, XYZ’s “Decrease Price” strategy is dominating its “Increase Advertising” Strategy
(as1<3 & 2<6) so we can omit XYZ’s “Increase Advertising” Strategy and the game reduces to:
XYZ
Give Coupons Decrease Price
Decrease Price 6 1
ABC

Maintain Present Strategy -3 2

Solving the reduced 2*2 Game:
For ABC probabilities of mixed strategy will be given by
P(Decrease price)=a22-a21/(a11+a22 – (a21+a12)=2-(-3)/6+2-(1-3)=5/10=1/2
P(Maintain present Strategy)=1- P(Decrease price)=1-1/2=1/2
P(Give Coupons)=0
P(Increase Advertising)=0
For XYZ probabilities of mixed strategy will be given by
P(Give Coupons)=a22-a12/(a11+a22 – (a21+a12)=2-(1)/6+2-(1-3)=1/10
P(Decrease price)=1- P(Give Coupons)=1-1/10=9/10
P(Increase Advertising)=0
P(Maintain present Strategy)=0
Value of game will be given by
𝑎11 𝑎22 − 𝑎12 𝑎21 6 ∗ 2 − (−3) ∗ (1) 3
𝑣= = =
𝑎11 + 𝑎22 − (𝑎12 + 𝑎21 ) 6 + 2 − (−3 + 1) 2

Page7

By PashupatiNathVerma
 GAME THEORY
SOLVING (2*n) GAME WITHOUT SADDLE POINT
In the situation when a game has no saddle point and with the help of dominance property we have reduced game to a 2*n game
as
Player B’s Strategies
B1 B2 ------- Bj ------- Bn
A1 a11 a12 ------- a1j ------- a1n
A2 a21 a22 ------- a2j ------- a2n
Then, above game can be solved graphically in a very easy manner as follows:
Step1:For 2*n game, draw two vertical parallel axis representing outcome from the two row strategies A1 and A2. If p1 denotes
probability of mixed strategy A1 then probability of A2 will be (1-p1)
Step2:Let Axis-1 represent the second row strategy payoffs (i.e. when p1=0)
and Axis-2 represent the first row strategy payoffs(i.e. when p1=1).
Step3: Then plot the expected payoff lines for mixed strategies of row
player against each pure strategies of column player, which will be given by

Column Player Row Player’s Expected Payoff Expected Payoff

B’s Pure Expected Payoffs whenp1=0 whenp1=1
Strategy Lines on Axis-1 on Axis-2
B1 a11* p1+ a21* (1-p1) a21 a11
B2 a12* p1+ a22* (1-p1) a22 a12

Bj a1j* p1+ a2j* (1-p1) a2j a1j

Bn a1n* p1+ a2n* (1-p1) a2n a1n

The above expected payoff Line can be plotted. For this connect the a2j on Axis-1(where p1=0 ) with a1J on Axis-2(where p1=1 )this
will give expected payoff of row player for jth strategy of column player.
Step4:In this way we will find the lower envelop and highest point of this envelop formed by intersection of expected payoff lines
will represent maximin value.
Step5:Then with the help of two parallel lines strategies and upper point intersections lines we make 2*2 matrix we find the value
of game and strategies. Page8

By PashupatiNathVerma
 GAME THEORY
SOLVING (m*2) GAME WITHOUT SADDLE POINT
In the situation when a game has no saddle point and with the help of dominance property we have reduced game to a m*2 game
as
B1 B2
A1 a11 a12
A2 a21 a22
. .
. .
Ai ai1 ai2
. .
. .
Am am1 am2
Step1:For m*2 game, draw two vertical parallel axis representing
outcome from the two row strategies.
Step2:Let Axis-1 represent the second column strategy payoffs with
mixed strategy probability q1and Axis-2 represent the first column
strategy payoffs with probability (1- q1).
Step3: Then plot the expected payoff lines for mixed strategies of
column player against each pure strategies of row player. For this
connect the ai1 on Axis-2 with ai2 on Axis-1 to get expected payoff of
column player for ith strategy of row player.
Step4: In this way we will find the upper envelop and lowest point of this envelop formed by intersection of expected payoff
lines will represent minimax value.
Step5:Then with the help of two parallel lines strategies and lower point intersections lines we make 2*2 matrix we find the
value of game and strategies.

ILLUSTRATION5: Solve the game whose pay off matrix is:

B
B1 B2 B3 B4
A1 3 5 10 12
A
A2 8 4 3 2
SOLUTION:
Step 1-Determination of Saddle Point:Let us denote row minima by and column maxima by

B1 B2 B3 B4 Row
Minima Maximin Value
A1 3 5 10 12 3
A2 8 4 3 2 2
Col. 8 5 10 12
Maxima

Minimax Value
As, Maximin Value ≠ Minimax Value and hence saddle point does not exists.

Step 2- Reducing Size of the Game: As none of the row or column strategy is
dominated by other, hence game cannot be reduced. As it is 2*4 game so it can
be solved graphically.

Step 3-Plotting Payoffs on graph & solving the game: Let p1 be the probability of
adopting A1 strategy then (1-p1) will be the probability for A2. Now the payoffs for
strategies of B can be plotted between two parallel axis representing A 2& A1
Page9

By PashupatiNathVerma
 GAME THEORY
Column Player Row Player’s Expected Payoff Expected Payoff
B’s Pure Expected Payoffs whenp1=0 whenp1=1
Strategy Lines on Axis-1 on Axis-2
B1 3* p1+8* (1-p1) 8 3
B2 4* p1+ 4* (1-p1) 4 4
B3 10* p1+ 3* (1-p1) 3 10
B4 12* p1+ 2* (1-p1) 2 12

From graph it is clear that maximin point is formed with payoff line of strategy B1&B2.
Thus game will be reduced to

B1 B2 Difference Reverse Difference Row Probability

A1 3 5 2 4 4/6=2/3
A2 8 4 4 2 2/6=1/3
Difference 5 1 6
Reverse Difference 1 5
Column Probability 1/6 5/6

Value of game=3*(2/3)+8*(1/3)=14/3
And mixed strategy will be

 A A2  B B2 B3 B4 
SA =  1  and S B =  1
 2 / 3 1/ 3 1/ 6 5 / 6 0 0 

ILLUSTRATION6:Obtain the optimal strategies for both persons and the value of game for zero sum two-person game whose
payoff matrix is as follows:
5 -3
3 5
-1 6
4 -4
2 -1
-5 0
SOLUTION:Let us denote Column player (say, B) strategy as B1& B2. Row player’s (say, A) strategy may be designated as A1, A2,
A3, A4, A5, and A6 respectively.Clearly, the given problem does not possess any saddle point and no strategy dominates other. So,
pure strategy does not exists and let player B plays mixed strategy
B B2 
SB =  1
 q1 q2 
Where q2=1-q1
The expected Payoffs line of B’s against A’s pure move will be given by

Page10

A’s Pure Move B’s Expected Payoff lines Expected Pay when q1=0 Expected Pay when q1=1
A1 5q1-3(1- q1) -3 5
A2 3q1+5(1- q1) 5 3
A3 -1q1+6(1- q1) 6 -1
A4 4q1-4(1- q1) -4 4
A5 2q1-1(1- q1) -1 2
A6 -5q1+0(1- q1) 0 -5
The above expected payoff line can be plotted as function of q1as adjacent graph.

By PashupatiNathVerma
 GAME THEORY
Since the player B wishes to minimize his expected loss (and expected profit for A), we consider the lowest point of upper most
boundary of A’s expected payoff lines. That point is minimax expected value of game. As minimax value is at intersection of
strategy A1& A2 only thus all other A’s Strategy will be redundant in this game and the game will reduces to
B1 B2
A1 5 -3
A2 3 5

The value of above game can be calculated very easily as follows:

B1 B2 Difference Reverse A’s

Difference Probabilities
A1 5 -3 8 2 2/10=1/5
A2 3 5 2 8 8/10=4/5
Difference 2 8 10
Reverse 2 8
Difference Value of game
B’s 2/10=1/5 8/10=4/5 V=5*(1/5)+(-3)(4/5)=-7/5
Probabilities

Optimal Strategies for A & B

A A2 A3 A4 A5  B B2 
SA =  1  and S B =  1 
1/ 5 4/5 0 0 0 1/ 5 4 / 5

Page11

By PashupatiNathVerma
 GAME THEORY
SOLVING n*n GAME WITHOUT SADDLE POINT (ODDMENTS METHOD)
Step.1: Subtract each row from the row above it. That is, subtract second row
from first row and third row from second row etc. Write the difference of these
rows in the form of two-successive rows below the rows of the matrix.
Step 2: Subtract each column from the column to its left i.e. subtract second
column from the first and the third column from the second and so on and write
the difference in the form of two successive columns to the right of the given
matrix. This is shown below:
Step 3: Calculate the oddments for A’s I, II, and III strategies and B’s I, II, and III
strategies.
 Oddment for A’s strategies denoted by R1, R2, R3, will be given by following Determinants
−6 4 4 2 4 2
R1 = = 40 R2 = = −22 R3 = = 28
−1 −6 −1 −6 −6 4
 Oddment for B’s strategies denoted by C1, C2, C3, will be given by following Determinants
−4 −2 6 −2 6 −4
C1 = = 28 C2 = = −22 C3 = = 40
6 −4 1 −4 1 6

Step 4: Write these oddments, neglecting the signs as shown next:

Step 5: Now verify the sums of oddments of A and B. They must be same to
solve the game by matrix method. In this example both sums are equal to 90.
This means that both players use their pure strategies and hence the game is
conformable for matrix method. The necessary condition for solving the game
is the sums of two oddments must be same. In case the sums of oddments are
different, then both the players do not use their all-pure strategies and hence
matrix method fails.
Step6: Divide the oddments by the sum of the oddments to get the optimal strategies of players.
A (40 / 90, 22 / 90, 28. 90), B (28 / 90, 22 / 90, 40 / 90) OR A (20 / 45, 11 / 45, 14 / 45), B (14 / 45, 11 / 45, 20 / 45).
Value of the game is given by: v = [40 × 3 + 22 × (–3) + 28 × (–4)] / (40 + 22 + 28) = (–58 / 90)= (–29 / 45) OR
v = [40 × (–1) + 22 × 3 + 28 × (–3)] / 90 = –58 / 90 OR
v = [ 40 × (–3) + 22 × (–1) + 28 × 3] / 90 = – 58 / 90 OR
v = [ 28 × 3 + 22 × (–1) +40 × (–3)] / 90 = – 58 / 90 OR
v = [28 × ( –3) + 22 × 3 + 40 × (–1)] / 90 = – 58 / 90 OR
v = [ 28 × (–4) + 22 × (–3) + 40 × 3] / 90 = –58 / 90
The value can be found by any one of the above.

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By PashupatiNathVerma
GAME THEORY

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By PashupatiNathVerma