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Game Theory Exercise

This document contains three questions regarding game theory exercises. Question 1 asks to find the saddle point and determine if the game is stable using a provided payoff table. Question 2 provides a payoff table for a game between two companies selecting marketing strategies and asks to determine the best strategies using minimax criterion with and without eliminating dominated strategies. Question 3 asks to use a graph method and mixed strategies approach to solve the payoff table from Question 2 and find the maximum expected value for each player.

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Barkah Triabi
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135 views3 pages

Game Theory Exercise

This document contains three questions regarding game theory exercises. Question 1 asks to find the saddle point and determine if the game is stable using a provided payoff table. Question 2 provides a payoff table for a game between two companies selecting marketing strategies and asks to determine the best strategies using minimax criterion with and without eliminating dominated strategies. Question 3 asks to use a graph method and mixed strategies approach to solve the payoff table from Question 2 and find the maximum expected value for each player.

Uploaded by

Barkah Triabi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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12/7/2021

GAME THEORY
EXERCISE

Q1. Pure Strategy

Find the saddle point for the game having the following payoff table

Use the minimax criterion to find the best strategy for each player.
Does this game have a saddle point? Is it a stable game?

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12/7/2021

Q2. Pure Strategy


Two companies share the bulk of the market for a particular kind of product. Each is
now planning its new marketing plans the next year in an attempt to wrest some sales
away from the other company. (The total sales for the product are relatively fixed, so
one company can increase its sales only by winning them away from the other). Eacd
company is considering three possibilities:
1. Better packaging of the product;
2. Increased advertising;
3. A slight reduction in price.
The cost of the three alternatives are quite comparable and sufficiently large that each
company will select just one. The estimated effect of each combination of alternatives
on the increased percentage of the sales for company 1 is as follows:

Q2. Pure Strategy

Each company must make its selection before learning the decision of other
company.
1. Without eliminating dominated strategies, use the minimax (or maximin) criterion
to determine the best strategy for each company.
2. Now identify and eliminate dominated strategies as far as possible. Make a list of
the dominated strategies, showing the order in which you were able to eliminate
them. Then show the resulting reduced payoff table with no remaining dominated
strategies.

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Q3. Mixed Strategy

Using Graph Method and Mixed Strategy approach, solve the payoff table above. What is
the best strategy from Player 1 and Player 2? Find the maximum expected value from each
players!

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