Game Theory and its Applications

(BITS F314)

Paras Sachdeva

Department of Economics and Finance

BITS Pilani, Pilani Campus

www.parassachdevaeco.com

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)
 Game Theory and its Applications

Max-Min and Min-Max Stratergy

Escaping from the worst outcome.

Nash equilibrium exists, but the other player is irrational. He or she

will not play that strategy.

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)
 Game Theory and its Applications

Max-Min and Min-Max Stratergy

Max-Min Strategy

Given a strategic form game, Γ = ⟨N, (Si ) , (ui )⟩, the maxmin value or
security value of a player i (i = 1, . . . , n) is given by:

vi = max min ui (si , s−i ) .

si ∈Si s−i ∈S−i

Any strategy si∗ ∈ Si that guarantees this payoff to player i is called a

maxmin strategy or security strategy of player i.

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)
 Game Theory and its Applications

Max-Min and Min-Max Stratergy

2
1
A B
A 4,1 0,4
B 1,5 1,1

Player 1: Maxmin strategy is B, and the Maxmin value is 1.

Player 2: Maxmin strategy is A and B, and the Maxmin value is 1.

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)
 Game Theory and its Applications

Max-Min and Min-Max Stratergy

Given a strategic form game Γ = ⟨N, (Si ) , (ui )⟩ has a pure strategy
Nash equilibrium (s1∗ , . . . , sn∗ ). Then

ui (s1∗ , . . . , sn∗ ) ≥ vi ∀i ∈ N.

Proof: ∀i ∈ N,
∗
ui (s1∗ , . . . , sn∗ ) = max ui si , s−i


.
si ∈Si

∗


ui si , s−i ≥ min ui (si , s−i ) .
s−i ∈S−i

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)
 Game Theory and its Applications

Max-Min and Min-Max Stratergy

∗


max ui si , s−i ≥ max min ui (si , s−i ) .
si ∈Si si ∈Si s−i ∈S−i

ui (s1∗ , . . . , sn∗ ) ≥ vi ∀i ∈ N.

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)
 Game Theory and its Applications

Max-Min and Min-Max Stratergy

Min-Max Strategy

Given a strategic form game, Γ = ⟨N, (Si ) , (ui )⟩, the minmax value of
a player i (i = 1, . . . , n) is given by:

vi = min max ui (si , s−i ) .

s−i ∈S−i si ∈Si

∗ ∈S
Any strategy profile s−i −i of the other players that forces the
payoff vi on player i is called a minmax strategy profile (of the rest of
the players) against player i.

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)
 Game Theory and its Applications

Max-Min and Min-Max Stratergy

2
1
A B
A 4,1 0,4
B 1,5 1,1

Player 1: Minmax value is 1. Minmax strategy of player 2 against

player 1 is strategy B.
Player 2: Minmax value is 4. Minmax strategy of player 1 against
player 2 is strategy A.

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)
 Game Theory and its Applications

Max-Min and Min-Max Stratergy

Consider a strategic form game Γ = ⟨N, (Si ) , (ui )⟩. Then ∀i ∈ N

vi ≥ Vi
∗ is a minmax strategy against player i.
Proof: Suppose s−i
∗


vi = max ui si , s−i ∀i ∈ N.
si ∈Si

∀i ∈ N that
∗


ui si , s−i ≥ min ui (si , s−i ) ∀si ∈ Si .
s−i ∈S−i

∗


vi = max ui si , s−i ≥ max min ui (si , s−i ) = vi ∀i ∈ N.
si ∈Si si ∈Si s−i ∈S−i

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)
 Game Theory and its Applications

Max-Min and Min-Max Stratergy

Suppose a strategic form game Γ = ⟨N, (Si ) , (ui )⟩ has a pure strategy
Nash equilibrium (s1∗ , . . . , sn∗ ). Then ∀i ∈ N

ui (s1∗ , . . . , sn∗ ) ≥ vi

Proof: ∀i ∈ N,

ui (s1∗ , . . . , sn∗ ) = max ui si , s−i

∗


.
si ∈Si

∗


max ui si , s−i ≥ min max ui (si , s−i ) ∀i ∈ N.
si ∈Si s−i ∈S−i si ∈Si

ui (s1∗ , . . . , sn∗ ) ≥ vi ∀i ∈ N

Paras Sachdeva BITS Pilani, Pilani Campus Game Theory and its Applications (F314)