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Game Theory Report

The document provides an introduction to game theory, which studies decision-making in situations where outcomes depend on the actions of multiple parties. Key concepts include games, strategic interaction, payoffs, strategies, and Nash Equilibrium, with examples such as the Prisoner's Dilemma illustrating individual versus group rationality. Game theory has applications across various fields, including economics, politics, biology, and computer science.

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16 views12 pages

Game Theory Report

The document provides an introduction to game theory, which studies decision-making in situations where outcomes depend on the actions of multiple parties. Key concepts include games, strategic interaction, payoffs, strategies, and Nash Equilibrium, with examples such as the Prisoner's Dilemma illustrating individual versus group rationality. Game theory has applications across various fields, including economics, politics, biology, and computer science.

Uploaded by

douaeslh2
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Topic of the project : game theory

students : 202338060032 douae salhi.


202338060047 fadoua
aallaoui.

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Introduction to Game Theory

Game theory is the study of how people make decisions when

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the outcome depends on the actions of multiple individuals or

parties. It provides a mathematical framework for analyzing

strategic situations, in which the outcome depends on the

actions of multiple individuals or parties. Game theory has been

applied to a wide range of fields, including economics, politics,

biology, and computer science.

Key Concepts in Game Theory

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Game: A situation in which multiple individuals or parties

make decisions that affect the outcome.

Strategic interaction: The interaction between individuals or

parties that make decisions that affect the outcome.

Payoff: The outcome or reward received by an individual or

party as a result of their decision.

Strategy: A plan of action for an individual or party in a

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game.

Nash Equilibrium: A state in which no individual or party can

improve their payoff by unilaterally changing their strategy,

assuming all other individuals or parties keep their strategies

unchanged.

Types of Games

Zero-sum game: A game in which the total payoff is zero, and


one individual's gain is equal to another individual's loss.
Non-zero-sum game: A game in which the total payoff is not
zero, and the outcome is not necessarily a win-lose situation.
Cooperative game: A game in which individuals or parties

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work together to achieve a common goal.
Non-cooperative game: A game in which individuals or
parties make decisions independently and do not cooperate with
each other.

Prisoner's Dilemma

The Prisoner's Dilemma is a classic example of a game that

illustrates the conflict between individual and group rationality.

The game is as follows:

Two prisoners, A and B, are arrested and interrogated

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separately by the police. Each prisoner has two options: to

confess or to remain silent. The payoffs for each option are as

follows:

Prisoner B Confesses Prisoner B Remains Silent

Prisoner A Confesses A: 2 years, B: 2 years A: 1 year, B: 3 years

Prisoner A Remains Silent A: 3 years, B: 1 year A: 1 year, B: 1

year

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The dominant strategy for each prisoner is to confess,

regardless of what the other prisoner does. This is because

confessing guarantees a sentence of no more than 2 years,

whereas remaining silent risks a sentence of 3 years if the other

prisoner confesses. However, if both prisoners confess, they both

receive a sentence of 2 years, which is worse than the outcome if

they both remain silent (1 year each). This illustrates the conflict

between individual and group rationality, as the dominant

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strategy for each individual leads to a suboptimal outcome for

both.

Applications of Game Theory

Game theory has been applied to a wide range of fields,

including:

Economics: Game theory has been used to study oligopolies,

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auctions, and other economic systems.

Politics: Game theory has been used to study international

relations, voting systems, and other political systems.

Biology: Game theory has been used to study the evolution of

cooperation and conflict in biological systems.

Computer Science: Game theory has been used to study

artificial intelligence, machine learning, and other computer

science applications.

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Conclusion

Game theory provides a powerful framework for analyzing

strategic situations and making decisions in complex

environments. By understanding the key concepts and types of

games, individuals and organizations can make more informed

decisions and achieve better outcomes.

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References:

-Wikipedia
-Investopedia
-Stanford Encyclopedia of Philosophy
-Khan academy
-University of Princeton

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