Scribd
Upload
91 views21 pages

Game Theory (Operation Research)

Game theory is the study of mathematical models of strategic decision making between rational parties. Some key points: - Game theory originated in the 18th century but was formalized in the 20th century by Neumann and Morgenstern. - It assumes players have choices, end states have defined payoffs, players have perfect information, and players are rational actors seeking to maximize payoffs. - A basic example is a two-person, zero-sum game represented via a payoff matrix where one player's gains equal the other's losses. Players determine optimal strategies like maximin or through dominance. - Mixed strategies, where players randomize their choices, can produce equilibrium outcomes like in the sample game

Uploaded by

YASH ACHARYA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
91 views21 pages

Game Theory (Operation Research)

Game theory is the study of mathematical models of strategic decision making between rational parties. Some key points: - Game theory originated in the 18th century but was formalized in the 20th century by Neumann and Morgenstern. - It assumes players have choices, end states have defined payoffs, players have perfect information, and players are rational actors seeking to maximize payoffs. - A basic example is a two-person, zero-sum game represented via a payoff matrix where one player's gains equal the other's losses. Players determine optimal strategies like maximin or through dominance. - Mixed strategies, where players randomize their choices, can produce equilibrium outcomes like in the sample game

Uploaded by

YASH ACHARYA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 21

GAME THEORY

(OPERATION RESEARCH)
YASH ACHARYA-140050119561
SUJOY DAS-140050119556
LALBABU YADAV-140050119560
PURAV VYAS-150053119033
CONTENT’S
HISTORY
ASSUMPTIONS
EXAMPLE
APPILCATIONS
HISTORY

 Early discussions of examples of two-person games


occurred long before the rise of modern, mathematical
game theory. The first known discussion of game
theory occurred in a letter written by Charles Walde
grave, an active Jacobite , and uncle to James
Waldegrave , a British diplomat, in 1713.
 Game theory did not really exist as a unique field
until John von Neumann published a paper in
1928. Von Neumann's original proof used Brouwer's
fixed-point theorem on continuous mappings into
compact convex sets, which became a standard
method in game theory and mathematical economics.
His paper was followed by his 1944 book Theory of
Games and Economic Behavior co-authored
with Oskar Morgenstern.
GAME THEORY

 Game theory is "the study of mathematical models of conflict


and cooperation between intelligent rational decision-makers".

 Game theory is mainly used in economics, political science,


and psychology, as well as logic, computer
science and biology.

 Originally, it addressed zero-sum games, in which one


person's gains result in losses for the other participants.

 Today, game theory applies to a wide range of behavioral


relations, and is now an umbrella term for the science of
logical decision making in humans, animals, and computers.
GAME THEORY ASSUMPTIONS
(1) Each decision maker has available to him
two or more well-specified choices or
sequences of choices.

(2) Every possible combination of plays


available to the players leads to a well-defined
end-state (win, loss, or draw) that terminates
the game.

(3) A specified payoff for each player is


associated with each end-state.
(4) Each decision maker has perfect
knowledge of the game and of his
opposition.

(5) All decision makers are rational; that is,


each player, given two alternatives, will
select the one that yields him the greater
payoff.
TWO-PERSON
ZERO-SUM GAME
Most common form
Two competitors, each will be rewarded
Fixed reward total
What one wins, the other loses
PAY-OFF MATRIX

• Presented as reward
for player A

B’s strategy

x y z
1 80 40 75
A’s strategy
2 70 35 30

A Little Game Theory 8


MAXIMIN (MINIMAX)

• A chooses the strategy where he gets the best


payoff if B acts optimally
– Maximizes the minimum

x y z

1 80 40 75

2 70 35 30
A Little Game Theory 9
MAXIMIN (MINIMAX)

• A chooses the strategy where he gets the best


payoff if B acts optimally
Does not always
– Maximizes the minimum occur

“Saddle point”

x y z Value of the Game

1 80 40 75

2 70 35 30
A Little Game Theory 10
DOMINANCE

• y dominates x for player B

x y z

1 80 40 75

2 70 35 30
A Little Game Theory 11
DOMINANCE

• y dominates x for player B


• ...then 1 dominates 2 for player A

x y z

1 80 40 75

2 70 35 30
A Little Game Theory 12
DOMINANCE

• y dominates x for player B


• ...then 1 dominates 2 for player A
• ......then y dominates z for player B

x y z

1 80 40 75

2 70 35 30
A Little Game Theory 13
DOMINANCE

• y dominates x for player B


• ...then 1 dominates 2 for player A Doesn’t always
• ......then y dominates z for player B happen

• .........done Useful for big


tables
x y z

1 80 40 75

2 70 35 30
A Little Game Theory 14
EXAMPLE
MIXED STRATEGIES

w x y z
1 75 105 65 45
2 70 60 55 40
3 80 90 35 50
4 95 100 50 55

A Little Game Theory 15


MIXED STRATEGIES

w x y z
1 75 105 65 45
2 70 60 55 40
3 80 90 35 50
4 95 100 50 55

A Little Game Theory 16


MIXED STRATEGIES

w x y z
1 75 105 65 45
2 70 60 55 40
3 80 90 35 50
4 95 100 50 55
A Little Game Theory 17
MIXED STRATEGY

 A will choose strategy 1 y z


with probability p
• V(y) = 65p + 50(1-p) 1 65 45
• V(z) = 45p + 55(1-p)
4 50 55
 What value of p makes A
in different to B’s choice?

A Little Game Theory 18


MIXED STRATEGY

 A will choose strategy 1 with y z


probability p 1 65 45
 65p + 50(1-p) = 45p + 55(1-p)
• p = 0.8 4 50 55
• V = 53
 B will choose y with
probability q
 65q + 45(1-q) = 50q + 55(1-q)
• q = 0.6
• V = 53

A Little Game Theory 19


APPLICATIONS

ASW (Hide and Seek)


Arms Control
Advertising Strategy
Smuggling
Making the All-Star Team
Multiethnic Insurgency and Revolt
Drug Testing (Wired, August 2006)

A Little Game Theory 20


THANK YOU

You might also like