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Lecture 09

Game Theory is the mathematical study of conflict and cooperation between rational decision-makers, focusing on predicting player behavior in 2-player games. It categorizes games into types such as cooperative vs non-cooperative, symmetric vs asymmetric, and zero-sum vs non-zero-sum. The concept of Nash Equilibrium is introduced, illustrating optimal strategies where no player has an incentive to change their action, exemplified by the Prisoner's Dilemma.

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13 views24 pages

Lecture 09

Game Theory is the mathematical study of conflict and cooperation between rational decision-makers, focusing on predicting player behavior in 2-player games. It categorizes games into types such as cooperative vs non-cooperative, symmetric vs asymmetric, and zero-sum vs non-zero-sum. The concept of Nash Equilibrium is introduced, illustrating optimal strategies where no player has an incentive to change their action, exemplified by the Prisoner's Dilemma.

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vijeejeni123
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Game Theory

Lecture 09
2-Player games
Things get more complicated when there’s a
second player.
• How can you predict what that person will do?
• Can you ensure that you will do well
regardless of the other player?
• This is the essence of Game Theory.
Game Theory is...
“the study of mathematical
models of conflict and
cooperation between
intelligent, rational
decision-makers”
Game Theory is...
It is a Interactive decision theory

Game Theory is a branch of mathematics that


formally defines how best to play these
games.
Types of Game theory
Game Theory can be divided into 5 main types of games:

• Cooperative vs Non-Cooperative Games: In cooperative games,


participants can establish alliances in order to maximise their
chances to win the game (eg. negotiations). In non-cooperative
games, participants can’t instead form alliances (eg. wars).

• Symmetric vs Asymmetric Games: In a symmetric game all the


participants have the same goals and just their strategies
implemented in order to achieve them will determine who wins the
game (eg. chess). In asymmetric games instead, the participants
have different or conflicting goals.
Types
• Perfect vs Imperfect Information Games: In Perfect Information
games all the players can see the other players moves (eg. chess).
Instead, in Imperfect Information games, the other players' moves
are hidden (eg. card games).

• Simultaneous vs Sequential Games: In Simultaneous games, the


different players can take actions concurrently. Instead in Sequential
games, each player is aware of the other players' previous actions
(eg. board games).
Types
• Zero-Sum vs Non-Zero Sum Games: In Zero Sum games, if a
player gains something that causes a loss to the other players. In
Non-Zero Sum games, instead, multiple players can take benefit of
the gains of another player.
Zero sum vs Non-Zero sum
A Game's "Sum"
• Games can be "zero-sum" or "non-zero sum"
• If a game is zero-sum then the two players are directly competing - for
one to win X, the other must lose X
• Contrast this a game where the two players are not completely
opposed.
‣ E.g. Prisoner's Dilemma
• Zero-sum games allow us to make assumptions about how
players will act but they are not the general case.
• In Zero-sum game: the utilities in each entry sum to 0 (or a
constant)
Example
If we take coin toss scenario, following matrix
can be created
Rock-paper-scissors
Column player aka. player 2
(simultaneously) chooses a
column

Row player 0, 0 -1, 1 1, -1


aka. player 1
chooses a row
1, -1 0, 0 -1, 1
A row or column is
called an action or -1, 1 1, -1 0, 0
(pure) strategy
Row player’s utility is always listed first, column player’s second
Zero-sum game: the utilities in each entry sum to 0 (or a constant)
Three-player game would be a 3D table with 3 utilities per entry, etc.
Nash Equilibrium
Stability arising from situation where each player maximise
advantage (settle argument)
A Nash equilibrium is a set of strategies, one for each
player, such that no player has incentive to change his or
her strategy given what the other players are doing.

How will people behave? Risk aversion, uncertain payoffs…


Nash Equilibrium
“No player would want to change their action.
Changing their action from Nash Equilibrium
means they are not playing optimally”
Ex- The Prisoner’s Dilemma
This game is a classic example and illustrates
the difficulty of acting together cooperatively for
common or mutual benefit in scenarios where
agents are only concerned about their self-
interest.
Ex- The Prisoner’s Dilemma
In this game, we have two prisoners, Alan and Ben, who
were caught for the same crime and are held in two
different interrogation rooms. They’ve been given two
choices:
• Stay silent
• Confess to the crime
Ex- The Prisoner’s Dilemma
Let’s say that each of them is given two choices. So, there
would be 4 outcomes in total:

{Silent, Silent}
{Confess, Silent}
{Silent, Confess}
{Confess, Confess}
Ex- The Prisoner’s Dilemma
Following the results of the outcome:

• If both of them remain silent, both of them get


imprisonment for a year
• If either one of them confesses, the confessor walks free
and the other prisoner gets 15 years of imprisonment
• If both of them confess, both of them receive
imprisonment for 10 years
Ex- The Prisoner’s Dilemma
And these 4 outcomes can be conveniently
represented as a game matrix:
Ex- The Prisoner’s Dilemma
The dilemma comes in because neither
prisoner is aware of what the other prisoner did.
So, what do you think is the Nash Equilibrium
action in this problem? It is very intuitive to
think that prisoners would collaborate with each
other and stay silent.
Ex- The Prisoner’s Dilemma
Ex- The Prisoner’s Dilemma
Ex- The Prisoner’s Dilemma
If we superimpose the Rational thinking of both
these prisoners, the result is something like
this:
Ex- The Prisoner’s Dilemma
The best strategy comes out to be {Confess,
Confess}. Even if either of them tries to deviate
from this action, they are worse off than what
they are getting by playing this action. Hence,
{Confess, Confess} is a Nash Equilibrium
strategy.
Real world applications
• Economics
• Environmental Issues
• International Relations
• Psychology
• Military Strategy
• Evolutionary Biology
• Artificial Intelligence
- Thank you -

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