Introduction

Pirate Game is a multi-player version of the ultimatum game to begin with we

would start by explaining the basic concept behind the game and the various
dimensions which pertain to how the game is carried out along with the
implications and final result.

Summary of The Game

Imagine a pirate ship with a crew of fearsome, perfectly logical pirates and a
treasure of 100 gold coins to be divided amongst them. How shall they do it? They
have long agreed upon the pirate treasure division procedure: The pirates are
linearly ordered by rank, with the Captain, the first Lieutenant, the second
Lieutenant and so on down the line; but let us simply refer to them as Pirate 1,
Pirate 2, Pirate 3 and so on. Pirate 9 is swabbing the decks in preparation. For the
division procedure, all the pirates assemble on deck, and the lowest-ranking pirate
mounts the plank. Facing the other pirates, she proposes a particular division of the
gold — so-and-so many gold pieces to the captain, so-and-so many pieces to Pirate
2 and so on. The pirates then vote on the plan, including the pirate on the plank,
and if a strict majority of the pirates approve of the plan, then it is adopted and that
is how the gold is divided. But if the pirate’s plan is not approved by a pirate
majority, then regretfully she must walk the plank into the sea (and her death) and
the procedure continues with the next-lowest ranking pirate, who of course is now
the lowest-ranking pirate. The pirates are perfectly logical, and not only that, they
have the common knowledge that they are all perfectly logical. In particular, in
their reasoning they can rely on the fact that the other pirates are logical, and that
the other pirates know that they are all logical and that they know that, and so on.

Furthermore, it is common knowledge amongst the pirates that they all share the
same pirate value system, with the following strictly ordered list of priorities

Pirate value system

1. Stay alive.
2. Get gold.
3. Cause the death of other pirates.
4. Arrange that other’s gold goes to the most senior pirates.
Analysis of the Game

Now that we have listed out the basic premises of the game we would begin by
identifying the players involved and the optimum solution to the game.

Players Involved in the game- There are total of 10 Pirates in the game.

Game Type- This is a game of perfect information.

Game Analysis

That is, at all costs, each pirate would prefer to avoid death, and if alive, to get as
much gold as possible, but having achieved that, would prefer that as many other
pirates die as possible (but not so much as to give up even one gold coin for
additional deaths), and if all other things are equal, would prefer that whatever gold
was not gotten for herself, that it goes as much as possible to the most senior
pirates, for the pirates are, in their hearts, conservative people. So, what plan
should you propose as Pirate 10? Well, naturally, the pirates will consider Pirate
10’s plan in light of the alternative, which will be the plan proposed by Pirate 9,
which will be compared with the plan of Pirate 8 and so on. Thus, it seems we
should propagate our analysis from the bottom, working backwards from what
happens with a very small number of pirates.

One Pirate-If there is only one pirate, the captain, then she mounts the plank, and
clearly she should propose “Pirate 1 gets all the gold”, and she should vote in favor
of this plan, and so Pirate 1 gets all the gold, as anyone would have expected.

Two Pirates-If there are exactly two pirates, then Pirate 2 will mount the plank,
and what will she propose? She needs a majority of the two pirates, which means
she must get the captain to vote for her plan. But no matter what plan she proposes,
even if it is that all the gold should go to the captain, the captain will vote against
the plan, since if Pirate 2 is killed, then the captain will get all the gold anyway,
and because of pirate value 3, she would prefer that Pirate 2 is killed off. So Pirate
2’s plan will not be approved by the captain, and so unfortunately, Pirate 2 will
walk the plank.

Three Pirates-If there are three pirates, then what will Pirate 3 propose? Well, she
needs only two votes, and one of them will be her own. So she must convince
either Pirate 1 or Pirate 2 to vote for her plan. But actually, Pirate 2 will have a
strong incentive to vote for the plan regardless, since otherwise Pirate 2 will be in
the situation of the two-pirate case, which ended with Pirate 2’s death. So Pirate 3
can count on Pirate 2’s vote regardless, and so Pirate 3 will propose: Pirate 3 gets
all the gold! This will be approved by both Pirate 2 and Pirate 3, a majority, and so
with three pirates, Pirate 3 gets all the gold.

Four Pirates-Pirate 4 needs to have three votes, so she needs to get two of the
others to vote for her plan. She notices that if she is to die, then Pirates 1 and 2 will
get no gold, and so she realizes that if she offers them each one gold coin, they will
prefer that, because of the pirate value system. So Pirate 4 will propose to give one
gold coin each to Pirates 1 and 2, and 98 gold coins to herself. This plan will pass
with the votes of 1, 2 and 4.

Five Pirates-Pirate 5 needs three votes, including her own. She can effectively buy
the vote of Pirate 3 with one gold coin, since Pirate 3 will otherwise get nothing in
the case of four pirates. And she needs one additional vote, that of Pirate 1 or 2,
which she can get by offering two gold coins. Because of pirate value 4, she would
prefer that the coins go to the highest ranking pirate, so she offers the plan: two
coins to Pirate 1, nothing to pirate 2, one coin to pirate 3, nothing to Pirate 4 and 97
coins to herself. This plan will pass with the votes of 1, 3 and 5.

Six Pirates-Pirate 6 needs four votes, and she can buy the votes of Pirates 2 and 4
with one gold coin each, and then two gold coins to Pirate 3, which is cheaper than
the alternatives. So she proposes: one coin each to 2 and 4, two coins to 3 and 96
coins for herself, and this passes with the votes of 2, 3, 4 and 6.

Seven Pirates-Pirate 7 needs four votes, and she can buy the votes of Pirates 1 and
5 with only one coin each, since they get nothing in the six-pirate case. By offering
two coins to Pirate 2, she can also get another vote (and she prefers to give the
extra gold to Pirate 2 than to other pirates in light of the pirate values).

Eight Pirates-Pirate 8 needs five votes, and she can buy the votes of Pirates 3, 4
and 6 with one coin each, and ensure another vote by giving two coins to Pirate 1,
keeping the other 95 coins for herself. With her own vote, this plan will pass.

Nine Pirates-Pirate 9 needs five votes, and she can buy the votes of Pirates 2, 5
and 7 with one coin each, with two coins to Pirate 3 and her own vote, the plan will
pass.
Ten Pirates-In light of the division offered by Pirate 9, we can now see that Pirate
10 can ensure six votes by proposing to give one coin each to Pirates 1, 4, 6 and 8,
two coins to Pirate 2, and the remaining 94 coins for herself. This plan will pass
with those pirates voting in favor (and herself), because they each get more gold
this way than they would under the plan of Pirate 9.

We can summarize the various proposals in a table, where the nth row corresponds to the proposal
of Pirate n.

Theories put to use in Pirate Game

Ultimatum Theory- The ultimatum game is a game in economic experiments. The

first player (the proposer) conditionally receives a sum of money and proposes
how to divide the sum between the proposer and the other player. The second
player (the responder) chooses to either accept or reject this proposal.

Evolutionary Game theory- Evolutionary game theory (EGT) is the application

of game theory to evolving populations in biology. It defines a framework of
contests, strategies, and analytics into which Darwinian competition can be
modelled.
Super Rationality Theory- In economics and game theory, a participant is
considered to have super rationality (or renormalized rationality) if they
have perfect rationality (and thus maximize their own utility) but assume that all
other players are super rational too.

Conclusion

Pirate Theory Real time Implementation

We have Formulated a game in order to understand and showcase that how we can
implement the game on real time basis in the real world therefore in this context
we have taken the scenario of Venture capital.

Game situation- The game revolves around a venture capitalist who has invested in
4 ventures and therefore now received returns from his investments which is
100,000 therefore now he has to distribute the returns effectively in order to have
the maximum money but keep his venture people satisfied Because otherwise he
will lose all the money.

We have given different payoffs in order to assess the problem and analysis in
order to accurately solve the problem. Therefore, following are the payoffs.

1 More coins

2 Less Coins

3 No Coins

4 No one gets
Anything
Therefore as per the given pay-offs