Choosing A Strategy Set

Strategy set[edit]
A player's strategy set defines what strategies are available for them to play.

A player has a finite strategy set if they have a number of discrete strategies available to them. For
instance, a game of rock paper scissors comprises a single move by each player—and each player's
move is made without knowledge of the other's, not as a response—so each player has the finite
strategy set {rock paper scissors}.
A strategy set is infinite otherwise. For instance the cake cutting game has a bounded continuum of
strategies in the strategy set {Cut anywhere between zero percent and 100 percent of the cake}.
In a dynamic game, the strategy set consists of the possible rules a player could give to
a robot or agent on how to play the game. For instance, in the ultimatum game, the strategy set for
the second player would consist of every possible rule for which offers to accept and which to reject.
In a Bayesian game, the strategy set is similar to that in a dynamic game. It consists of rules for what
action to take for any possible private information.
Choosing a strategy set[edit]

In applied game theory, the definition of the strategy sets is an important part of the art of making a
game simultaneously solvable and meaningful. The game theorist can use knowledge of the overall
problem to limit the strategy spaces, and ease the solution.
For instance, strictly speaking in the Ultimatum game a player can have strategies such as: Reject
offers of ($1, $3, $5, ..., $19), accept offers of ($0, $2, $4, ..., $20). Including all such strategies
makes for a very large strategy space and a somewhat difficult problem. A game theorist might
instead believe they can limit the strategy set to: {Reject any offer ≤ x, accept any offer > x; for x in
($0, $1, $2, ..., $20)}.
Pure and mixed strategies[edit]

A pure strategy provides a complete definition of how a player will play a game. In particular, it
determines the move a player will make for any situation they could face. A player's strategy set is
the set of pure strategies available to that player.
A mixed strategy is an assignment of a probability to each pure strategy. This allows for a player to
randomly select a pure strategy. (See the following section for an illustration.) Since probabilities are
continuous, there are infinitely many mixed strategies available to a player.
Of course, one can regard a pure strategy as a degenerate case of a mixed strategy, in which that
particular pure strategy is selected with probability 1 and every other strategy with probability 0.
A totally mixed strategy is a mixed strategy in which the player assigns a strictly positive probability
to every pure strategy. (Totally mixed strategies are important for equilibrium refinement such
as trembling hand perfect equilibrium.)
Mixed strategy[edit]
A B
Illustration[edit]
Consider the payoff matrix pictured to the right (known as a coordination A 1, 1 0, 0
game). Here one player chooses the row and the other chooses a column.
The row player receives the first payoff, the column player the second. If B 0, 0 1, 1
row opts to play A with probability 1 (i.e. play A for sure), then he is said to
Pure coordination game
be playing a pure strategy. If column opts to flip a coin and play A if the coin lands heads and B if
the coin lands tails, then he is said to be playing a mixed strategy, and not a pure strategy.
Significance[edit]
In his famous paper, John Forbes Nash proved that there is an equilibrium for every finite game.
One can divide Nash equilibria into two types. Pure strategy Nash equilibria are Nash equilibria
where all players are playing pure strategies. Mixed strategy Nash equilibria are equilibria where at
least one player is playing a mixed strategy. While Nash proved that every finite game has a Nash
equilibrium, not all have pure strategy Nash equilibria. For an example of a game that does not have
a Nash equilibrium in pure strategies, see Matching pennies. However, many games do have pure
strategy Nash equilibria (e.g. the Coordination game, the Prisoner's dilemma, the Stag hunt).
Further, games can have both pure strategy and mixed strategy equilibria. An easy example is the
pure coordination game, where in addition to the pure strategies (A,A) and (B,B) a mixed equilibrium
exists in which both players play either strategy with probability 1/2.
A disputed meaning[edit]
During the 1980s, the concept of mixed strategies came under heavy fire for being "intuitively
problematic".[2] Randomization, central in mixed strategies, lacks behavioral support. Seldom do
people make their choices following a lottery. This behavioral problem is compounded by the
cognitive difficulty that people are unable to generate random outcomes without the aid of a random
or pseudo-random generator.[2]
In 1991,[3] game theorist Ariel Rubinstein described alternative ways of understanding the concept.
The first, due to Harsanyi (1973), [4] is called purification, and supposes that the mixed strategies
interpretation merely reflects our lack of knowledge of the players' information and decision-making
process. Apparently random choices are then seen as consequences of non-specified, payoff-
irrelevant exogenous factors. However, it is unsatisfying to have results that hang on unspecified
factors.[3]
A second interpretation imagines the game players standing for a large population of agents. Each
of the agents chooses a pure strategy, and the payoff depends on the fraction of agents choosing
each strategy. The mixed strategy hence represents the distribution of pure strategies chosen by
each population. However, this does not provide any justification for the case when players are
individual agents.
Later, Aumann and Brandenburger (1995), [5] re-interpreted Nash equilibrium as an equilibrium
in beliefs, rather than actions. For instance, in rock paper scissors an equilibrium in beliefs would
have each player believing the other was equally likely to play each strategy. This interpretation
weakens the predictive power of Nash equilibrium, however, since it is possible in such an
equilibrium for each player to actually play a pure strategy of Rock.
Ever since, game theorists' attitude towards mixed strategies-based results have been ambivalent.
Mixed strategies are still widely used for their capacity to provide Nash equilibria in games where no
equilibrium in pure strategies exists, but the model does not specify why and how players randomize
their decisions.
Behavior strategy[edit]
While a mixed strategy assigns a probability distribution over pure strategies, a behavior
strategy assigns at each information set a probability distribution over the set of possible actions.
While the two concepts are very closely related in the context of normal form games, they have very
different implications for extensive form games. Roughly, a mixed strategy randomly chooses a
deterministic path through the game tree, while a behavior strategy can be seen as a stochastic
path.
The relationship between mixed and behavior strategies is the subject of Kuhn's theorem. The result
establishes that in any finite extensive-form game with perfect recall, for any player and any mixed
strategy, there exists a behavior strategy that, against all profiles of strategies (of other players),
induces the same distribution over terminal nodes as the mixed strategy does. The converse is also
true.

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Strategy set[edit]

A player's strategy set defines what strategies are available for them to play.

Choosing a strategy set[edit]

Pure and mixed strategies[edit]

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