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Introduction To Game Theory and Its Examples

Game theory is formally presented. It is defined as the study of decision-making involving multiple players where choices can impact others' interests. Key concepts are introduced like Nash equilibrium, dominant strategies, extensive games, and different types of games. The Prisoner's Dilemma is provided as a classic example of a non-zero-sum game analyzed in game theory.

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Shahzad Ahmad
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125 views18 pages

Introduction To Game Theory and Its Examples

Game theory is formally presented. It is defined as the study of decision-making involving multiple players where choices can impact others' interests. Key concepts are introduced like Nash equilibrium, dominant strategies, extensive games, and different types of games. The Prisoner's Dilemma is provided as a classic example of a non-zero-sum game analyzed in game theory.

Uploaded by

Shahzad Ahmad
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 PPTX, PDF, TXT or read online on Scribd
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GAME THEORY

Introduction to Game
Theory and its examples

GAME THEORY
Presented to
Dr Javaid Farzand

Presented by
Shahzad Ahmad
Mobeen Ghori

FA15-MSC-021
FA15-MSC-025

Game Theory
Common Methodologies:
Common knowledge
A fact is common knowledge if all players
know it, and know that they all know it, and so
on. The structure of the game is often
assumed to be common knowledge among
the players.
Dominating strategy
A strategy dominates another strategy of a
player if it always gives a better payoff to that
player, regardless of what the other players
are doing. It weakly dominates the other

Common Methodologies(Cont.)
Extensive game
An extensive game (or extensive form game)
describes with a tree how a game is played. It
depicts the order in which players make moves,
and the information each player has at each
decision point.
Like Min-Max Strategy
Game
A game is a formal description of a strategic
situation.

What is Game Theory


Game theory
Game theory is the formal study of decisionmaking where several players must make
choices that potentially affect the interests of
the other players.
Nash equilibrium
A Nash equilibrium, also called strategic
equilibrium, is a list of strategies, one for each
player, which has the property that no player
can unilaterally change his strategy and get a
better payoff.

Game Theory
Payof
A payoff is a number, also called utility, that
reflects the desirability of an outcome to a
player, for whatever reason. When the
outcome is random, payoffs are usually
weighted with their probabilities. The
expected payoff incorporates the players
attitude towards risk.
Perfect information
A game has perfect information when at any
point in time only one player makes a move,
and knows all the actions that have been
made until then.

Game Theory
Player
A player is an agent who makes decisions in a
game.
Strategy
In a game in strategic form, a strategy is one
of the given possible actions of a player. In an
extensive game, a strategy is a complete plan
of choices, one for each decision point of the
player.

Game Theory
Types of games:
Zero-sum game
A game is said to be zero-sum if for any outcome, the
sum of the payoffs to all players is zero. In a two-player
zero-sum game, one players gain is the other players
loss, so their interests are diametrically opposed.
Non-zero-sum game
Many games studied by game theorists are non-zerosum games, because thehas net results greater or less
than zero. Informally, in non-zero-sum games, a gain by
one player does not necessarily correspond with a loss
by another.

Game Theory
Prisoners Dilemma
The Prisoners Dilemma is a game in strategic
form between two players. Each player has two
strategies, called cooperate and defect, which
are labelled C and D for player I and c and d for
player II, respectively. (For simpler identification,
upper case letters are used for strategies of player
I and lower case letters for player II.)

Prisoners Dilemma
There are two prisoners caught by the cop and
there is no evidence of their crime. The cop starts
investigation by both in different rooms.
Each prisoner has choice he may Confess or stay
Silent
Cop give them choice that if he should confess
then he is released and the other prisoner jailed
for 4 years
If both are confessed then both jailed for 2 years
If both stay silent then both jailed for one year
What they should do??

Prisoners Dilemma

Prisoners Dilemma

Prisoners Dilemma

Prisoners Dilemma

Prisoners Dilemma

Prisoners Dilemma

Prisoners Dilemma

Game Theory
Example of Prisoners Dilemma in real life
problems like
In environmental studies
In economics
In sports etc

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