Progressive Education Societys Modern College Of Engineering Department Of Computer Engineering

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Game Theory
By Soumyashree Bilwar Department Of Computer Engineering

Overview
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What is Game Theory ( laymans language) Game Theory (Formal Definition) Major Assumptions Types Of Games Representation Of Games Nash Equilibrium Popular Games Prisoners Dilemma Chicken Game General and applied uses Conclusion References

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Game Theory?????
Lets us first understand what is a Game?? Game, in the mathematical sense, is defined as strategic situation in which there are multiple participants.
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Is Sudoku a "game" ? No. Is Chess a "game" ? Yes.

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What is Game Theory?

Game Theory is one way of studying how an individual or a group makes astrategic choice. Practical applications in everyday life:
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Friends choosing where to go for dinner Gamblers betting in a card game Diplomats negotiating a treaty

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(laymans language)

What is Game Theory?

(Formal Definition )
Game Theory is a set of tools and techniques for decisions under uncertainty involving two or more intelligent opponents in which each opponent aspires to optimize his own decision at the expense of the other opponents.
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Major Assumptions
Players the number of participants may be two or more. A player can be a single individual or a group with the same objective. q Timing the conflicting parties decide simultaneously. q Conflicting Goals each party is interested in maximizing his or her goal at the expense
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Major Assumptions(cont)
Repetition most instances involve repetitive solution. q Payoff the payoffs for each combination of decisions are known by all parties. q Information Availability all parties are aware of all pertinent information. Each player knows all possible courses
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Types of Games:
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Cooperative or non-cooperative Symmetric and asymmetric Zero-sum and non-zero-sum Simultaneous and sequential Perfect information and imperfect information Combinatorial games Infinitely long games Discrete and continuous games Many-player and population games Metagames

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Representation of games
Type 1:Extensive form-> Tree
Point of choice for a player. The player is specified by a number listed by the vertex.
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Possible action for that player.

Payoffs

Representation of games
Type 2: Normal form-> Matrix
Player 2 Player 2 choosesLeft choosesRight Player 1 choosesUp
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4,3

-1,-1

Payoffs

Player1 chooses Player 1 0,0 3,4 Rows choosesDown Player2 chooses Normal form or payoff matrix Columns of a 2-player, 2-strategy game

Nash Equilibrium
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John Nash was a mathematician and an economist. He developed several theories in economics . He was a Princeton and CMU graduate. His most important contribution was the theory of Nash equilibrium He is the person portrayed in the movie A beautiful mind.

John Nash
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What is Nash Equilibrium ?

For any two groups that do not co-operate there will be a point at which neither group can benefit from unilateral action , and that the groups will hold their strategies constant at this point. The Nash equilibrium is not usually the most effective strategy; it is only the best one without co-operation. Through co-operation it is only
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Some of the popular Games of Game Theory

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Prisoner's dilemma Battle of the sexes Deadlock Rock, Paper, Scissors Trust game Cake cutting Chicken(aka hawk-dove) Traveller's dilemma

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Prisoners Dilemma
Cooperation is usually analysed in game theory by means of a non-zero-sum game called the "Prisoner's Dilemma. The prisoner's dilemma is meant to study short term decision-making.
Prisoner B stays silent Prisoner A stays silent Each serves 1 month Prisoner A confesses 4/13/12

Prisoner B confesses

Prisoner A: 1 year Prisoner B: goes free

Prisoner A: goes free Each serves 3 months Prisoner B: 1 year

http://pespmc1.vub.ac.be/PRISDIL.html

Analysis of Prisoners Dilemma

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Each player gains when both stay silent. (one month) One player stays silent and other confesses then one who confesses will gain more. (confess- freed, silent-1 year) If both confess , both lose (or gain very little) but not as much as the "cheated" silent prisoner whose cooperation is not returned. (3 months) Prisoners Dilemma has single Nash equilibrium. Friend or Foe?is a game show that aired from 2002 to 2005 on theGame Show Networkin theUnited States. It is an example of the prisoner's dilemma game tested by real people

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Chicken Game
Chicken is a famous game where two people drive on a collision course straight towards each other. Whoever swerves is considered a 'chicken' and loses, but if nobody swerves, they will Driver B Driver B both crash. Straight
Swerve Driver A Swerve Driver A Straight Tie , Tie Win , Lose Lose, Win Crash 4/13/12

http://pespmc1.vub.ac.be/PRISDIL.html

Analysis of Chicken Game

Both lose when both swerve. q One player wins when one swerves and other goes straight. q If both go straight, both lose(lose more than what they would have lost when both swerve. Because if both go straight they CRASH) q Chicken Game has 2 Nash Equilibrium.
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General and applied uses and business Economics

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E.g. modellingcompeting behaviours of interactingagents , auctions, bargaining, social network formation. q Political Science E.g. public choice, social choice, players are voters, politicians , states. q Biology E.g. evolution , mobbing, animal communication q Computer Science and logic E.g. game semantics, online algorithms , equilibrium in games and peer to peer systems, time complexity q Philosophy E.g. co ordination games , convention , common knowledge

Conclusion
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Game theory is exciting because although the principles are simple, the applications are far-reaching. Game theory is the study of cooperative and non cooperative approaches to games and social situations in which participants must choose between individual benefits and collective benefits. Game theory can be used to design credible commitments, threats, or promises, or to assess propositions and statements offered by others.

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References
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Research papers and books

Game Theory at Workby James D. Miller Thinking Strategically: Competitive Edge in Business, Politics and Everyday Lifeby Avinash Dixit Existence of Equilibrium in Discrete URL Market Games by Somdeb Lahiri http://en.wikipedia.org/wiki/Game_theory http://faculty.lebow.drexel.edu/mccainr/top/ eco/game/game-toc.html http://www2.owen.vanderbilt.edu/mike.shor/ courses/game-theory/quiz/problems2.html http://en.wikipedia.org/wiki/Nash_equilibriu m
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Thank you

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