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Keval Patel
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44 views9 pages

Ot Presentation

Uploaded by

Keval Patel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NAME:- Keval H Patel

BRANCH:- M.E-1 (Production Engineering)


TOPIC:- Introduction to Game Theory
SUBJECT:- Optimization Techniques
Agenda
1. Introduction to Game Theory
2. Definitions
3. Assumptions of Game theory.
4. Game Theory Algorithm
5. Arithmetic Method
6. Reduction By Dominance Method
7. Reduction By Average Method
Introduction To
Game Theory
A Game is a contest, involves two or more competitors, each of them
wants to win.
In Game Theory, Competitors are referred as Players, Players may be
Individual, Organization etc.
This Theory is used for the Study of Decision Making Under the
situation of conflicts or competition.
The objective of Players in Competitive situation is to Maximize the
Minimum Gains (Maximin), Minimize the Maximum loss
(Minimax).
Definitions
1) Strategy: Course of Action, that players adopts for every Payoff or Outcomes.

 Pure Strategy:- When a player choose only one particular strategy.


 Mixed Strategy:- When a player choose two or more strategy.
 In Pure strategy, probability of a strategy is 1, whereas in mixed strategy the
probability is less than 1 but the sum of probability of all strategy in a game will
be 1.

2) Value of Game:- It is the amount (expected payoff) which is obtained by each


player with the use of appropriate (optimal strategy). It is denoted by “V”

 The game will be fair if the value of game is 0, otherwise it will be unfair.
3) Saddle Point:- It is a equilibrium point, where the maximin value = minimax
value.

4)Two Person Zero Sum Games & Non Zero Sum Game:-
 In a game, if sum of the gain to one player is equal to the sum of losses to another
player, so that the sum of the gains & losses equals to zero, then the game is said
to be a Two Person Zero-Sum Game.
 If the sum of losses & gain are not zero then it is called Non Zero Sum Game.
Assumptions of
Game Theory
• Each player has available to him a finite number of possible strategies (course of
action). The list may not be same for each players.
• Players act rationally & intelligently.
• List of strategies of each player & amount of gain or loss on an individual’s
choice of strategy is known to each player in advance.
• One player attempts to maximize gain & other attempts to minimize losses.
• Both player make their decisions individually prior to the play without direct
communication between them.
• Payoff is fixed & determined in advance.
Game Theory
Algorithm
 Write the Payoff Matrix.
 Apply Maximin & Minimax Principle.
 If there is saddle point:- Identify the value of game & write the optimal strategy
of the players.
 If there is no saddle point:
o Is it 2x2 payoff matrix:- If “yes” then solve using analytical or matrix method
for mixed strategies. If “No” use dominance method to reduce the payoff
matrix into 2x2 matrix or 2*n or m*2
o If it is 2x2 matrix after Dominance then use analytical method.
o If 2*n or m*2 then use graphical method.
o If neither 2x2, 2*n or m*2 then formulate & solve as an LP problem.
Arithmetic
Method
1) Numerical problem for Pure Strategy
 If there is saddle point:-

 Hence, the Game has a saddle point at the cell corresponding to row 1 & column 1.
 Optimal probabilities: For player A1 [P1, P3] = A1 [1,0], For player A2 [Q1, Q3] = A2[1, 0]
2) Numerical problem for Mixed Strategy
 If there is no saddle point:-

 Maximin ≠ Minimax

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