Games Theory

Theory of Games
Dr Neeraj Kaushik
NIT Kurukshetra
WinLets
as much
Play aasGame
you can
! !!
Theory of Games 04/15/2024

Win as much as you can !!
Strategy Fund Release
4 Ds Lose Rs 100 lac to each team
3
3 Ds and 1 C Each D will win 100 lac and each C will lose 300
lac
2 Ds and 2 Cs Each D will win 200 lac and each C will lose 100
lac
1 D and 3 Cs D will win 300 lac and each C will lose 100 lac
4 Cs of Games
Theory Win Rs 100 lac to each team 04/15/2024
Introduction

Basic Terms
• Player • Strategy
• Payoff Matrix
• Play • Payoff
• Two person Zero sum • Optimal Strategy
Game • Value of the Game
Theory of Games 04/15/2024 5

Types of Games
Competitive
Situations
Pure Mix
6
Strategy Strategy
2 x 2 Strategy 2 x m or n x 2
Saddle Point m x n Strategies
Arithmetic Strategy
Exists LPP Method
Method Graphical Method

Saddle Point
• A Saddle point is a position in the payoff matrix
where, the maximum of row minima coincides 7
with the minimum of column maxima.
• The payoff at the saddle point is called the value
of the game.
Q1. Determining Saddle Point
Minimize losses of B
Player-B 8
Player A B1 B2 B3
Maximize A1 -1 2 -2
gains of A A2 6 4 -6
Player-B
Player A B1 B2 B3 Row Min 9
A1 -1 2 -2 -2 MaxiMin
A2 6 4 -6 -6
Col Max 6 4 -2
MiniMax
Player-B
Player A B1 B2 B3 B4 Row Min
A1 20 15 12 35 12
10
A2 25 14 8 10 8
A3 40 2 10 5
2
A4 -5 4 11 0
-5
Col Max 40 15 12 35
Principle of Dominance
• The superior strategies are said to dominate

the inferior ones. 11
• In such cases of dominance, we reduce the

size of the pay-off matrix by deleting those
strategies which are dominated by others.
Rules of Dominance
• If all the elements of a row, are less than or equal to the
corresponding elements of any other row then that row is 12
dominated by the other row.
• If all the elements of a column, are greater than or
equal to the corresponding elements of any other column
then that column is dominated by the other column.
Rules of Dominance
• Dominated rows and columns may be deleted to
reduce the size of the pay-off matrix, as the optimal 13
strategies will remain unaffected.
• If some linear combinations of certain rows dominate
ith row, then the ith row will be deleted. Similar
arguments follow for columns.
Q3. Principle of Dominance
B1 B2 B3 B4
A1 7 6 8 9 14
A2 -4 -3 9 10
A3 3 0 4 2
A4 10 5 -2 0
B1 B2 B3 B4
A1 7 6 8 9 15
A2 -4 -3 9 10
A4 10 5 -2 0

B1 B2 B3 RowCol
Ma
Min
A1 7 6 8 x
6
10
16
A2 -4 -3 9 6
-4
9
A4 10 5
Co -2
l
Ma
-2
Col Max 10 x6
10
9
Theory of Games 6 04/15/2024
9
B1 B2 B3 B4
A1 8 10 9 14 17
A2 10 11 8 12
A3 13 12 14 13

B1 B2 B3
18
A1 8 10 9
A2 10 11 8
A3 13 12 14

B1 B2 B3
19
A2 10 11 8
A3 13 12 14

B1 B2 B3
20
A3 13 12 14

B2
21
A3 12

Q5. Practice Question-1
B1 B2 B3 B4 B5
22
A1 2 4 3 8 4
A2 5 6 3 7 8
A3 6 7 9 8 7
A4 4 2 8 4 3
Player-B A2 dominates
Player A B1 B2 B3 A3, hence player 23
A1 -5 10 20 A will never
A2 5 -15 -10 choose A3
A3 5 -20 -15
Player-B B3 dominates
Player A B1 B2 B3 B2, hence Player 24
A1 -5 10 20 B will never
A2 5 -15 -10 choose B3

oi n t
dl e P
Player-B Row Min
S
A1
a d
Player A B1 B2
-5 10 -5
25
N o A2
Col Max 5
5 -15
10
-15

Q6.
B1 B2
26
A1 -5 10
A2 5 -15
• No Further Dominance
• No Saddle Point
Q7. Mixed Strategy Problems
Player-B
27
Strategy-1 Strategy-2 (1-q)
(q)
Player-A Strategy-1 (p) 3 5
Strategy-2 (1-p) 4 1
Mixed Strategy Problems
• If B select B1 then expected payoff of A is
• 3 p + 4 (1-p) 28
• If B select B2 then expected payoff of A is
• 5 p + 1 (1-p)
• Find p such that both payoff are equal
• 3 p + 4 (1-p) = 5 p + 1 (1-p) i.e. p = 3/5
Mixed Strategy Problems
• If A select A1 then expected payoff of B is
• 3 q + 5 (1-q) 29
• If A select A2 then expected payoff of B is
• 4 q + 1 (1-q)
• Find q such that both payoff are equal
• 3 q + 5 (1-q)= 4 q + 1 (1-q) i.e. q = 4/5
Q7. Value of the Game
B1 B2
30
A1 3 5 3/5
A2 4 1 2/5
4/5 1/5

Q7. Value of the Game
Payoff Probability Expected Value
3 3/5 * 4/5 3 * 3/5 * 4/5 31
5 3/5 * 1/5 5 * 3/5 * 1/5
4 2/5 * 4/5 4 * 2/5 * 4/5
1 2/5 * 1/5 1 * 2/5 * 1/5
Total 17/5

Q8. Mixed Strategy Problems
B2 B3
32
A2 8 -3
A3 -3 1

Q9. Graphical Method
B1 B2 B3
A1 8 4 -2 33
A2 -2 -1 3
• No Dominance
• No Saddle Point
• Can’t apply Arithmetic Method
Graphical Method
• Draw the 2 parallel lines as the strategies of

player having 2 strategies. 34
• Analyze the chart from that player’s

perspective e.g. for A, Maximize gains and
for B, Minimize losses.
A2 A1
A is looking Choose
for B2 & B3
maximizing
his Payoffs
Note the
highest point
in the shaded MaxiMin
region
Q10. Practice Question
B1 B2 B3 B4 B5 36
A1 2 -4 6 -3 5
A2 -3 4 -4 1 0

Q11. Graphical
Method B1 B2
A1 -6 7
A2 4 -5 38
A3 -1 -2
A4 -2 5
A5 7 -6

A5 Choose
A4 & A5
A2
A4
A3
MiniMax
A1
B1 B2 B3 B4
A1 19 6 7 5 40
A2 7 3 14 6
A3 12 8 18 4
A4 8 7 13 -1
A3
A1
B2 B4
41
A1 6 5
A2 3 6 A2
A3 8 4

B2 B4
42
A1 6 5 3/4
A2 3 6 1/4
1/4 3/4 Value of the Game: 5.25

B1 B2 B3 B4 B2 B3 43
A1 2 2 3 -1 A1 2 3
A2 4 3 2 6 A2 3 2

B1 B2 B3 B4
A1 3 2 4 0 44
A2 3 4 2 4
A3 4 2 4 0
A4 0 4 0 8
B1 B2 B3 B4
A2 3 4 2 4 45
A3 4 2 4 0
A4 0 4 0 8

B2 B3 B4
A2 4 2 4 46
A3 2 4 0
A4 4 0 8

B3 B4
A2 2 4 47
A3 4 0
A4 0 8

B3 B4
A3 4 0 2/3 48
A4 0 8 1/3
2/3 1/3

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Theory of Games

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024 5

Theory of Games 04/15/2024

• The superior strategies are said to dominate

• In such cases of dominance, we reduce the

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

• Draw the 2 parallel lines as the strategies of

• Analyze the chart from that player’s

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

Theory of Games 04/15/2024

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