GAME THEORY

Presented by :-
REENA SOREN - 210409120086
RUCHI SHARMA - 210409120094
 Game Theory

 Developed by Prof. John Von Neumann and Oscar

Morgenstern in 1928 game theory is a body of
knowledge that deals with making decisions .

 The approach of game theory is to seek , to

determine a rival’s most profitable counter-strategy
to one’s own best moves .
 Competitive situations
(Games Theory)

Pure strategy
Mixed strategy
(saddle point exist)

Strategies Game Strategies (linear

Strategies Game
( Arithmetic programming
(Graphical method)
method) method )
CLASSIFICATION
 Two –Person Game – A game with 2 number of
players.
 Zero Sum Game – A game in which sum of amounts
won by all winners is equal to sum of amounts lost by
all loser.
 Non –Zero Sum Game – A game in which the sum of
gains and losses are not equal .
 Pure – Strategy Game – A game in which the best
strategy for each players is to play one strategy
throughout the game .
 Mixed – Strategy Game – A game in which each player
employs different times in the game
Saddle point method
 At the right of each row , write the row
minimum and underline the largest of them .
 At the bottom of each column , write the
column maximum and underline the smallest
of them.
 If these two elements are equal , the
corresponding cell is the saddle point and the
value of the game.
The pay off matrix of a two person zero sum game is:

Player B
B1 B2 B3
15 2 3
Player A
16 5 7
-7 4 0

Player B
B1 B2 B3 R
A1
15 2 3 2
Player A A2
16 5 7 5
A3
-7 4 0 7
C
15 5 7
Dominance method
It states that if the strategy of a player dominates
over the other strategy in all conditions, the later
strategy can be ignored.
Rule 1 : If all the elements in a row of pay off matrix
are “<”or“=” to the corresponding elements of other
row then comparative row will deleted.
Rule 2 : If all the elements in a row of pay off matrix
are “>”or“=” to the corresponding elements of other
column then comparative row will deleted.
Considered a game with a pay off matrix.

A1 42 72 32 12
A2 43 30 25 10
A3 44 8 -10 0
A4 45 10 0 1532 *15  0 * 20
 96 / 7
35

B1 B2 B3 B4
A1 42 72 32 12
A2 40 30 25 10
A3 30 8 -10 0
A4 45 10 0 15
GRAPHICAL METHOD
It is helpful in finding out which of the two
strategies can be used.
 Considered a game with a pay –off matrix
B1 B2 B3 B4 B5
A1 2 -4 6 -3 5
A2 -3 4 -4 1 0

Solution : By applying dominance rule we can cut of the

following column .
B1 B2 B3 B4 B5
A1 2 -4 6 -3 5
A2 -3 4 -4 1 0
 B1 B3

So, we have : A1 2 -3
A2 -3 1

7 7
6
5 Value of game =
4 2*(4/9)-3*(5/9)
3 = 7/9
2
1
0
-1
-2
6 -3
5 -4
-5
4 -6
3 -7
2
1
0
LIMITATIONS OF GAME THEORY
Game theory cannot account for the fact that
in some situations we may fall into a Nash
equilibrium, and other times not, depending
on the social context and who the players are.
THANK YOU