LECTURE 1

GAME THEORY Prof. Sanjay Christian

JGIBA (Assistant Professor)
M.Phil (Statistics), M.Sc (Statistics) & B.Sc (Statistics)
INTRODUCTION

Game is a Competitive situations with two or more

competitors engaged in decision-making activities.

A game with two players, where a gain of one player equals a loss
to the other is called a two-person zero sum game.

In a two-person zero sum game, the resulting gain can be

represented in the form of a matrix, called the pay of
matrix of a game.
Continue………………

Consider two players A and B in two person zero-sum

game. If player A has ‘m’ courses of action represented by
𝑨𝟏 , 𝑨𝟐 , … … … 𝑨𝒎 and player B has ‘n’ courses of action
represented by 𝑩𝟏 , 𝑩𝟐 , … … … 𝑩𝒏

Player B Player B

𝐵1 𝐵2 𝐵3 𝐵1 𝐵2 … 𝐵𝑛
𝐴1 𝑎11 𝑎12 … 𝑎1𝑛
𝐴1 −20 −12 4
𝐴2 𝑎21 𝑎22 … 𝑎2𝑛
Player A 𝐴2 24 −16 −4 . . . … .
𝐴3 12 14 4 Player A . . … .
.
. . . … .
𝐴𝑚 𝑎𝑚1 𝑎𝑚2 … 𝑎𝑚𝑛
Assumption of the Game

Each player has finite number of possible courses of action.

Player A attempts to maximize gains and Player B minimize losses.

The decisions of both players are made individually prior to the play
Pure Strategies : Games with Saddle Point
The players must select their respective strategies so that they may
Optimize their payoff.
Decision making criterion is referred to as the minimax-maximin
principle.
Such principle gives the best possible selection of a strategy for both
players.

Player A selects the strategy which maximizes his minimum gain.

Player B selects the strategy which minimizes his maximum loss.

The value of the game is the maximum guaranteed gain to player A

Or the minimum possible loss to player B & it is denoted by ‘V’
Saddle Point.
When maximin Value = Minimax value, the corresponding pure
strategies are called Optimal Strategies and game is said to have Saddle
Point.

Rules of Determining Saddle Point.

Select the minimum element of each row of the payoff matrix and
enclose it in

Select the maximum element of each column of the payoff matrix and
enclose it in

Find out the element which has both & . This element
represents the value of the game and is called Saddle Point.
 1ST Method Player B
𝐁𝟏 𝐁𝟐 𝐁𝟑
1 Solve the following game.
Player A
𝐀𝟏
𝐀𝟐
15
6
2
5
3
7
Answer: 𝐀𝟑 -7 4 0
Player B Row
Minimum Here,
𝐁𝟏 𝐁𝟐 𝐁𝟑
𝐀𝟏 15 2 3 2 From Row Minimum we find Maximum Value
i.e., Maxi-Min=5
Player A 𝐀𝟐 6 5 7 5
and
𝐀𝟑 -7 4 0 -7
From Column Maximum we find Minimum Value
Column 15 5 7 i.e., Mini-Max=5
Maximum

𝑴𝒂𝒙𝒊. 𝒎𝒊𝒏 = 𝑴𝒊𝒏𝒊. 𝒎𝒂𝒙 = 𝟓

Saddle point is at 𝑨𝟐 , 𝑩𝟐 & Value of the game is 5
Optimum Strategy for Player A is 𝑨𝟐 & Optimum Strategy of Player B is 𝑩𝟐
Alternate Method
Player B

1 Solve the following game.

𝐀𝟏
𝐁𝟏
15
𝐁𝟐
2
𝐁𝟑
3
Player A 𝐀𝟐 6 5 7
Answer: 𝐀𝟑 -7 4 0

Select the minimum element of each row of the payoff

matrix and enclose it in Player B
𝐁𝟏 𝐁𝟐 𝐁𝟑
Select the maximum element of each column of the 𝐀𝟏 15 2 3
payoff matrix and enclose it in
Player A 𝐀𝟐 6 5 7
𝐀𝟑 -7 4 0
Find out the element which has both &
This element represents the value of the game and is
called Saddle Point.
Saddle point is at 𝑨𝟐 , 𝑩𝟐 & Value of the game is 5
Optimum Strategy for Player A is 𝑨𝟐 & Optimum Strategy of Player B is 𝑩𝟐
 1ST Method Player B
𝐁𝟏 𝐁𝟐 𝐁𝟑 𝐁𝟒 𝐁𝟓

2 Solve the following game.

Player A
𝐀𝟏
𝐀𝟐
-3
2
-1
1
-1
0
4
1
2
1
Answer: 𝐀𝟑 -5 -4 -1 -3 5
𝑨𝟒 4 2 -5 1 -7
Player B Row
Minimum
𝐁𝟏 𝐁𝟐 𝐁𝟑 𝐁𝟒 𝐁𝟓 Here,

𝐀𝟏 -3 -1 -1 4 2 -3 From Row Minimum, we find Maximum Value i.e.,

Maxi-Min=0
Player A 𝐀𝟐 2 1 0 1 1 0
and
𝐀𝟑 -5 -4 -1 -3 5 -5
From Column Maximum, we find Minimum Value
𝑨𝟒 4 2 -5 1 -7 -7 i.e., Mini-Max=0

Column 4 2 0 4 5
Maximum
𝑴𝒂𝒙𝒊. 𝒎𝒊𝒏 = 𝑴𝒊𝒏𝒊. 𝒎𝒂𝒙 = 𝟎
Saddle point is at 𝑨𝟐 , 𝑩𝟑 & Value of the game is 0 (The Game is Fair)

Optimum Strategy for Player A is 𝑨𝟐 & Optimum Strategy of Player B is 𝑩𝟑

Alternate Method Player B
𝐁𝟏 𝐁𝟐 𝐁𝟑 𝐁𝟒 𝐁𝟓

2 Solve the following game.

Player A
𝐀𝟏
𝐀𝟐
-3
2
-1
1
-1
0
4
1
2
1
Answer: 𝐀𝟑 -5 -4 -1 -3 5
𝑨𝟒 4 2 -5 1 -7

Select the minimum element of each row of the payoff Player B

matrix and enclose it in
𝐁𝟏 𝐁𝟐 𝐁𝟑 𝐁𝟒 𝐁𝟓
𝐀𝟏 -3 -1 -1 4 2
Select the maximum element of each column of the Player A 𝐀𝟐 2 1 0 1 1
payoff matrix and enclose it in
𝐀𝟑 -5 -4 -1 -3 5
𝑨𝟒 4 2 -5 1 -7
Find out the element which has both &
This element represents the value of the game and is
called Saddle Point.
Saddle point is at 𝑨𝟐 , 𝑩𝟑 & Value of the game is 0 (Game is Fair)

Optimum Strategy for Player A is 𝑨𝟐 & Optimum Strategy of Player B is 𝑩𝟑