This document describes a social dilemma between two individuals, Robert and Stuart, who must decide how much effort to contribute to a joint project. It presents a game theory model to analyze their strategic situation. The Nash equilibrium is identified as both choosing 1 unit of effort, but their rational self-interest leads them to contribute less than the overall optimal outcome of both choosing the highest effort level. This demonstrates how independent actions in social dilemmas can result in suboptimal collective outcomes.
An experiment on multiple games environmentAshmayar_asif
The study experimentally investigates how players learn to make decisions when facing many different normal form games. In each of 100 rounds, games were randomly generated from a uniform distribution. There were either 2 games (treatments F) or 6 games (treatments M). Treatments also varied whether explicit information about opponents' past behavior was provided (treatments I) or not (treatments without I). The researchers found that players extrapolate between similar games but learn strategically equivalent games in the same way. Convergence to Nash equilibrium generally occurred when there were few games or explicit information was provided, but not otherwise, where play converged to a non-Nash distribution. Action choices could always be explained by belief-bundling or
Game theory is a branch of applied mathematics that analyzes strategic interactions between agents. It includes concepts like Nash equilibrium, mixed strategies, and coordination games. Game theory is used in economics, political science, biology, and other social sciences to model how individuals make decisions in strategic situations where outcomes depend on the decisions of others.
The document discusses how no-regret learning dynamics can converge to a Nash equilibrium in socially concave games. It shows that if each player uses a no-regret algorithm, their average actions will converge to a Nash equilibrium over time. This holds for several classes of games including Cournot competition, resource allocation games, routing games, and others. The proof works by relating the utility of playing the average strategy to that of playing the best response to the average.
This presentation is an attempt to introduce Game Theory in one session. It's suitable for undergraduates. In practice, it's best used as a taster since only a portion of the material can be covered in an hour - topics can be chosen according to the interests of the class.
The main reference source used was 'Games, Theory and Applications' by L.C.Thomas. Further notes available at: http://bit.ly/nW6ULD
Game theory is a mathematical approach to modeling strategic interactions between rational decision-makers. It assumes humans seek the best outcomes and makes predictions based on payoff matrices showing players' rewards for different strategy combinations. Common applications include economics, politics, and analyzing conflict and cooperation situations like the Prisoner's Dilemma. Game theory also studies concepts like Nash equilibrium, mixed strategies, and evolutionary stable strategies.
This document provides an overview of game theory and two-person zero-sum games. It defines key concepts such as players, strategies, payoffs, and classifications of games. It also describes the assumptions and solutions for pure strategy and mixed strategy games. Pure strategy games have a saddle point solution found using minimax and maximin rules. Mixed strategy games do not have a saddle point and require determining the optimal probabilities that players select each strategy.
I provide a (very) brief introduction to game theory. I have developed these notes to
provide quick access to some of the basics of game theory; mainly as an aid for students
in courses in which I assumed familiarity with game theory but did not require it as a
prerequisite
This document discusses applications of game theory in computer science, specifically in networking and algorithm analysis. It introduces fundamental game theory concepts like the Nash equilibrium. It then explores how game theory can be used to model network security as a stochastic game between a hacker and security team, allowing analysis of optimal strategies. It also explains Yao's minimax principle, which uses game theory to relate the complexities of deterministic and randomized algorithms by modeling them as players in a zero-sum game. By representing problems in game theoretic terms, complex issues can be analyzed to find solutions.
An experiment on multiple games environmentAshmayar_asif
The study experimentally investigates how players learn to make decisions when facing many different normal form games. In each of 100 rounds, games were randomly generated from a uniform distribution. There were either 2 games (treatments F) or 6 games (treatments M). Treatments also varied whether explicit information about opponents' past behavior was provided (treatments I) or not (treatments without I). The researchers found that players extrapolate between similar games but learn strategically equivalent games in the same way. Convergence to Nash equilibrium generally occurred when there were few games or explicit information was provided, but not otherwise, where play converged to a non-Nash distribution. Action choices could always be explained by belief-bundling or
Game theory is a branch of applied mathematics that analyzes strategic interactions between agents. It includes concepts like Nash equilibrium, mixed strategies, and coordination games. Game theory is used in economics, political science, biology, and other social sciences to model how individuals make decisions in strategic situations where outcomes depend on the decisions of others.
The document discusses how no-regret learning dynamics can converge to a Nash equilibrium in socially concave games. It shows that if each player uses a no-regret algorithm, their average actions will converge to a Nash equilibrium over time. This holds for several classes of games including Cournot competition, resource allocation games, routing games, and others. The proof works by relating the utility of playing the average strategy to that of playing the best response to the average.
This presentation is an attempt to introduce Game Theory in one session. It's suitable for undergraduates. In practice, it's best used as a taster since only a portion of the material can be covered in an hour - topics can be chosen according to the interests of the class.
The main reference source used was 'Games, Theory and Applications' by L.C.Thomas. Further notes available at: http://bit.ly/nW6ULD
Game theory is a mathematical approach to modeling strategic interactions between rational decision-makers. It assumes humans seek the best outcomes and makes predictions based on payoff matrices showing players' rewards for different strategy combinations. Common applications include economics, politics, and analyzing conflict and cooperation situations like the Prisoner's Dilemma. Game theory also studies concepts like Nash equilibrium, mixed strategies, and evolutionary stable strategies.
This document provides an overview of game theory and two-person zero-sum games. It defines key concepts such as players, strategies, payoffs, and classifications of games. It also describes the assumptions and solutions for pure strategy and mixed strategy games. Pure strategy games have a saddle point solution found using minimax and maximin rules. Mixed strategy games do not have a saddle point and require determining the optimal probabilities that players select each strategy.
I provide a (very) brief introduction to game theory. I have developed these notes to
provide quick access to some of the basics of game theory; mainly as an aid for students
in courses in which I assumed familiarity with game theory but did not require it as a
prerequisite
This document discusses applications of game theory in computer science, specifically in networking and algorithm analysis. It introduces fundamental game theory concepts like the Nash equilibrium. It then explores how game theory can be used to model network security as a stochastic game between a hacker and security team, allowing analysis of optimal strategies. It also explains Yao's minimax principle, which uses game theory to relate the complexities of deterministic and randomized algorithms by modeling them as players in a zero-sum game. By representing problems in game theoretic terms, complex issues can be analyzed to find solutions.
The document summarizes an experiment comparing behavior in the Impunity Game with complete versus incomplete information. In the Impunity Game, a dictator divides a sum between themselves and a recipient who can reject the offer. With incomplete information, the dictator does not know if their offer is rejected.
The experiment tests several hypotheses about dictator behavior. It finds large differences in dictator giving when recipients have incomplete information - dictators gave more. Two reasons are proposed: dictators cope with uncertainty by giving more; and the complete information Impunity Game is seen as a revenge game while the incomplete information version is not. The results provide insights into how information impacts strategic decision-making and social preferences.
Game Theory - Quantitative Analysis for Decision MakingIshita Bose
WHAT IS GAME THEORY?
HISTORY OF GAME THEORY
APPLICATIONS OF GAME THEORY
KEY ELEMENTS OF A GAME
TYPES OF GAME
NASH EQUILIBRIUM (NE)
PURE STRATEGIES AND MIXED STRATEGIES
2-PLAYERS ZERO-SUM GAMES
PRISONER’S DILEMMA
This document provides an overview of game theory concepts taught in a university course. It defines game theory as the mathematics of human interactions and decision making. Key concepts discussed include Nash equilibrium, where each player adopts the optimal strategy given other players' strategies. Examples of applications are given in fields like economics, politics and biology. Different types of games and solutions concepts like mixed strategies are also introduced.
This document provides an introduction and overview of game theory. It describes key concepts in game theory including the elements of a game, complete and incomplete information, perfect and imperfect information, Nash equilibrium, simultaneous decisions, pure strategies and dominant strategies. It provides examples of classic games including the prisoner's dilemma, trade war, and battle of the sexes to illustrate these concepts. The prisoner's dilemma and trade war examples show how the games have dominant strategies that lead to a Nash equilibrium that is not optimal for either player.
Game theory is a mathematical approach that analyzes strategic interactions between parties. It is used to understand situations where decision-makers are impacted by others' choices. A game has players, strategies, payoffs, and information. The Nash equilibrium predicts outcomes as the strategies where no player benefits by changing alone given others' choices. For example, in the Prisoner's Dilemma game about two suspects, confessing dominates remaining silent no matter what the other does, leading both to confess for a worse joint outcome than remaining silent.
Applications of game theory on event management Sameer Dhurat
Game theory is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers." Game theory is mainly used in economics, political science, and psychology, as well as logic, computer science and biology.
In this presentation ,discussed regarding Application of game theory on Event Management with the help of Prisoner's Dilemma Game
This document provides an overview of game theory, including:
- Defining game theory as a way to study strategic decision-making involving multiple participants with conflicting goals.
- The major assumptions of game theory include players having different objectives, making decisions simultaneously, and knowing potential payoffs.
- Common types of games are cooperative/non-cooperative, zero-sum/non-zero-sum, and simultaneous/sequential games.
- Popular examples used in game theory include the Prisoner's Dilemma and Chicken games, which demonstrate outcomes like Nash equilibrium.
- Game theory has applications in economics, politics, biology, and other fields for modeling interactions and predicting outcomes.
Game theory is the study of strategic decision making where outcomes depend on the choices of multiple players. It originated in the 1920s and was popularized by John von Neumann. Game theory analyzes cooperative and non-cooperative games with various properties like the number of players, information available, and whether choices are simultaneous or sequential. Important concepts in game theory include Nash equilibrium, where no player can benefit by changing strategy alone, and prisoner's dilemma, where defecting dominates but collective cooperation yields higher payoffs. Game theory is now used widely in economics, politics, biology, and other fields involving interdependent actors.
This document provides an outline for game theory. It introduces two-player zero-sum games and discusses finding optimal solutions through the minimax-maximin criterion. Pure and mixed strategy solutions are covered. Graphical and algebraic methods are summarized as ways to solve games, with examples provided. Dominance properties are also explained as a way to reduce game matrices.
The document provides an overview of game theory, including its basic terminology and solution methods for different types of games. It discusses pure and mixed strategy games, zero-sum and non-zero sum games, and approaches like Nash equilibrium. Limitations of game theory are noted, such as its assumptions of complete information and risk averse players not reflecting real world situations.
This document provides an introduction to game theory, including:
- Game theory mathematically determines optimal strategies given conditions to maximize outcomes.
- It has roots in ancient texts and was modernized in 1944. Famous examples include the Prisoner's Dilemma.
- Games involve players, strategies, and payoffs. Equilibria like Nash equilibria predict likely outcomes.
- Games can be simultaneous or sequential, affecting likely equilibria. Strategies can be pure or mixed.
This document provides an overview of game theory, including its founders John von Neumann and John Nash. Game theory is the study of strategic decision making among rational players where outcomes depend on the choices of all. It has applications in economics, politics, and biology. Key concepts discussed include Nash equilibrium, where no player benefits from changing strategies alone; the prisoner's dilemma game; and the tit-for-tat strategy of reciprocal cooperation and defection. The document outlines the assumptions, elements, and applications of game theory.
This document provides an overview of game theory. It defines game theory as a mathematical theory that models strategic interactions between competitors. It discusses the key assumptions of game theory, such as players making independent decisions and fixed payoffs. It also outlines common applications of game theory, mathematical formulations using payoff matrices, limitations, important terms, types of games, steps to solve games, and provides an example solved using minimax and maximin strategies.
Game theory is the study of strategic decision making. It involves analyzing interactions between players where the outcome for each player depends on the actions of all players. Key concepts in game theory include Nash equilibrium, where each player's strategy is the best response to the other players' strategies, and Prisoner's Dilemma, where the non-cooperative equilibrium results in a worse outcome for both players than if they had cooperated. Game theory is applied in economics, political science, biology, and many other fields to model strategic interactions.
Game theory a novel tool to design model analyze and optimize cooperative net...IAEME Publication
Game theory is introduced as a tool to model, analyze, and optimize cooperative wireless networks. It is well-suited to describe conflicting situations that arise between nodes attempting to communicate over a shared medium. Cooperative networks are modeled as games with nodes as players that can choose strategies like cooperating by forwarding packets or not. Specific scenarios modeled as games include mutual cooperation between two nodes, networks with multiple relay nodes, and networks with multiple sources and a single relay. Game theory provides a framework to understand nodes' incentives and predict network behavior and outcomes in these cooperative yet competitive distributed environments.
Game theory is a branch of applied mathematics that analyzes strategic interactions between rational decision-makers. It was developed by John von Neumann and Oskar Morgenstern in the 1940s. Game theory has applications in economics, military strategy, politics, and other domains involving conflict and cooperation between intelligent decision-makers. The document defines key concepts in game theory like Nash equilibrium, zero-sum games, prisoner's dilemma, and mixed strategies. It also discusses assumptions of game theory and provides examples of classic game theory models.
Game theory is the study of strategic decision making between two or more players under conditions of conflict or competition. A game involves players following a set of rules and receiving payoffs depending on the strategies chosen. Strategies include pure strategies that always select a particular action and mixed strategies that randomly select among pure strategies. The optimal strategies are those that maximize the minimum payoff for one player and minimize the maximum payoff for the other player. When the maximin and minimax values are equal, there is a saddle point representing the optimal strategies for both players.
This document provides an introduction to game theory. It discusses what game theory is, its essential features, and some key concepts in game theory including Nash equilibrium, backward induction, extensive form games, normal form games, mixed strategies, coordination games, zero-sum games, the prisoner's dilemma, chicken games, and repeated games. It also provides examples of applying game theory concepts to real-world situations such as the rivalry between Airbus and Boeing.
This document discusses a game theory example called the "grade game" to illustrate concepts like strategy, payoffs, and optimal choices. It presents a scenario where two students each privately choose to bid either A or B, and their grades depend on whether they match or differ from their paired partner's bid. The payoff matrix is shown, with outcomes like both getting a 7 if they match, or one getting a 10 and the other a 3 if they differ. It asks what students would choose, and discusses thinking about maximizing one's own outcome regardless of the partner, or trying to collude for higher joint grades. Overall it uses this game to introduce game theory ideas.
Axis Global Logistics provides supply chain and logistics services for retailers, including solutions for new store openings, remodels, installations, and events. Their services offer a one-touch solution utilizing one main point of contact and global capabilities to seamlessly manage the retail supply chain from end to end. This allows retailers to open stores on time and on budget while maintaining their brand integrity.
The document summarizes an experiment comparing behavior in the Impunity Game with complete versus incomplete information. In the Impunity Game, a dictator divides a sum between themselves and a recipient who can reject the offer. With incomplete information, the dictator does not know if their offer is rejected.
The experiment tests several hypotheses about dictator behavior. It finds large differences in dictator giving when recipients have incomplete information - dictators gave more. Two reasons are proposed: dictators cope with uncertainty by giving more; and the complete information Impunity Game is seen as a revenge game while the incomplete information version is not. The results provide insights into how information impacts strategic decision-making and social preferences.
Game Theory - Quantitative Analysis for Decision MakingIshita Bose
WHAT IS GAME THEORY?
HISTORY OF GAME THEORY
APPLICATIONS OF GAME THEORY
KEY ELEMENTS OF A GAME
TYPES OF GAME
NASH EQUILIBRIUM (NE)
PURE STRATEGIES AND MIXED STRATEGIES
2-PLAYERS ZERO-SUM GAMES
PRISONER’S DILEMMA
This document provides an overview of game theory concepts taught in a university course. It defines game theory as the mathematics of human interactions and decision making. Key concepts discussed include Nash equilibrium, where each player adopts the optimal strategy given other players' strategies. Examples of applications are given in fields like economics, politics and biology. Different types of games and solutions concepts like mixed strategies are also introduced.
This document provides an introduction and overview of game theory. It describes key concepts in game theory including the elements of a game, complete and incomplete information, perfect and imperfect information, Nash equilibrium, simultaneous decisions, pure strategies and dominant strategies. It provides examples of classic games including the prisoner's dilemma, trade war, and battle of the sexes to illustrate these concepts. The prisoner's dilemma and trade war examples show how the games have dominant strategies that lead to a Nash equilibrium that is not optimal for either player.
Game theory is a mathematical approach that analyzes strategic interactions between parties. It is used to understand situations where decision-makers are impacted by others' choices. A game has players, strategies, payoffs, and information. The Nash equilibrium predicts outcomes as the strategies where no player benefits by changing alone given others' choices. For example, in the Prisoner's Dilemma game about two suspects, confessing dominates remaining silent no matter what the other does, leading both to confess for a worse joint outcome than remaining silent.
Applications of game theory on event management Sameer Dhurat
Game theory is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers." Game theory is mainly used in economics, political science, and psychology, as well as logic, computer science and biology.
In this presentation ,discussed regarding Application of game theory on Event Management with the help of Prisoner's Dilemma Game
This document provides an overview of game theory, including:
- Defining game theory as a way to study strategic decision-making involving multiple participants with conflicting goals.
- The major assumptions of game theory include players having different objectives, making decisions simultaneously, and knowing potential payoffs.
- Common types of games are cooperative/non-cooperative, zero-sum/non-zero-sum, and simultaneous/sequential games.
- Popular examples used in game theory include the Prisoner's Dilemma and Chicken games, which demonstrate outcomes like Nash equilibrium.
- Game theory has applications in economics, politics, biology, and other fields for modeling interactions and predicting outcomes.
Game theory is the study of strategic decision making where outcomes depend on the choices of multiple players. It originated in the 1920s and was popularized by John von Neumann. Game theory analyzes cooperative and non-cooperative games with various properties like the number of players, information available, and whether choices are simultaneous or sequential. Important concepts in game theory include Nash equilibrium, where no player can benefit by changing strategy alone, and prisoner's dilemma, where defecting dominates but collective cooperation yields higher payoffs. Game theory is now used widely in economics, politics, biology, and other fields involving interdependent actors.
This document provides an outline for game theory. It introduces two-player zero-sum games and discusses finding optimal solutions through the minimax-maximin criterion. Pure and mixed strategy solutions are covered. Graphical and algebraic methods are summarized as ways to solve games, with examples provided. Dominance properties are also explained as a way to reduce game matrices.
The document provides an overview of game theory, including its basic terminology and solution methods for different types of games. It discusses pure and mixed strategy games, zero-sum and non-zero sum games, and approaches like Nash equilibrium. Limitations of game theory are noted, such as its assumptions of complete information and risk averse players not reflecting real world situations.
This document provides an introduction to game theory, including:
- Game theory mathematically determines optimal strategies given conditions to maximize outcomes.
- It has roots in ancient texts and was modernized in 1944. Famous examples include the Prisoner's Dilemma.
- Games involve players, strategies, and payoffs. Equilibria like Nash equilibria predict likely outcomes.
- Games can be simultaneous or sequential, affecting likely equilibria. Strategies can be pure or mixed.
This document provides an overview of game theory, including its founders John von Neumann and John Nash. Game theory is the study of strategic decision making among rational players where outcomes depend on the choices of all. It has applications in economics, politics, and biology. Key concepts discussed include Nash equilibrium, where no player benefits from changing strategies alone; the prisoner's dilemma game; and the tit-for-tat strategy of reciprocal cooperation and defection. The document outlines the assumptions, elements, and applications of game theory.
This document provides an overview of game theory. It defines game theory as a mathematical theory that models strategic interactions between competitors. It discusses the key assumptions of game theory, such as players making independent decisions and fixed payoffs. It also outlines common applications of game theory, mathematical formulations using payoff matrices, limitations, important terms, types of games, steps to solve games, and provides an example solved using minimax and maximin strategies.
Game theory is the study of strategic decision making. It involves analyzing interactions between players where the outcome for each player depends on the actions of all players. Key concepts in game theory include Nash equilibrium, where each player's strategy is the best response to the other players' strategies, and Prisoner's Dilemma, where the non-cooperative equilibrium results in a worse outcome for both players than if they had cooperated. Game theory is applied in economics, political science, biology, and many other fields to model strategic interactions.
Game theory a novel tool to design model analyze and optimize cooperative net...IAEME Publication
Game theory is introduced as a tool to model, analyze, and optimize cooperative wireless networks. It is well-suited to describe conflicting situations that arise between nodes attempting to communicate over a shared medium. Cooperative networks are modeled as games with nodes as players that can choose strategies like cooperating by forwarding packets or not. Specific scenarios modeled as games include mutual cooperation between two nodes, networks with multiple relay nodes, and networks with multiple sources and a single relay. Game theory provides a framework to understand nodes' incentives and predict network behavior and outcomes in these cooperative yet competitive distributed environments.
Game theory is a branch of applied mathematics that analyzes strategic interactions between rational decision-makers. It was developed by John von Neumann and Oskar Morgenstern in the 1940s. Game theory has applications in economics, military strategy, politics, and other domains involving conflict and cooperation between intelligent decision-makers. The document defines key concepts in game theory like Nash equilibrium, zero-sum games, prisoner's dilemma, and mixed strategies. It also discusses assumptions of game theory and provides examples of classic game theory models.
Game theory is the study of strategic decision making between two or more players under conditions of conflict or competition. A game involves players following a set of rules and receiving payoffs depending on the strategies chosen. Strategies include pure strategies that always select a particular action and mixed strategies that randomly select among pure strategies. The optimal strategies are those that maximize the minimum payoff for one player and minimize the maximum payoff for the other player. When the maximin and minimax values are equal, there is a saddle point representing the optimal strategies for both players.
This document provides an introduction to game theory. It discusses what game theory is, its essential features, and some key concepts in game theory including Nash equilibrium, backward induction, extensive form games, normal form games, mixed strategies, coordination games, zero-sum games, the prisoner's dilemma, chicken games, and repeated games. It also provides examples of applying game theory concepts to real-world situations such as the rivalry between Airbus and Boeing.
This document discusses a game theory example called the "grade game" to illustrate concepts like strategy, payoffs, and optimal choices. It presents a scenario where two students each privately choose to bid either A or B, and their grades depend on whether they match or differ from their paired partner's bid. The payoff matrix is shown, with outcomes like both getting a 7 if they match, or one getting a 10 and the other a 3 if they differ. It asks what students would choose, and discusses thinking about maximizing one's own outcome regardless of the partner, or trying to collude for higher joint grades. Overall it uses this game to introduce game theory ideas.
Axis Global Logistics provides supply chain and logistics services for retailers, including solutions for new store openings, remodels, installations, and events. Their services offer a one-touch solution utilizing one main point of contact and global capabilities to seamlessly manage the retail supply chain from end to end. This allows retailers to open stores on time and on budget while maintaining their brand integrity.
This document provides an overview of regulatory models for electricity markets in Europe following the liberalization of the electricity sector. It discusses the key provisions in the new Electricity Directive, principles of good regulation, findings from a EURELECTRIC survey of different countries' regulatory frameworks, views from the electricity industry, and conclusions and recommendations. The survey found differences in regulatory authorities, independence, competencies and practices across countries. While some aspects were criticized, others like consultation processes were seen positively. Regulatory stability is important for investment and supply security.
Backbone provides comprehensive event logistics solutions for marketers and agencies, including transportation, warehousing, installation services, and more. It offers a single point of access to its global expertise through a user-friendly online platform that provides real-time tracking and reporting. Backbone draws on its parent company Axis Global Logistics' 20 years of experience in supply chain management to plan and execute all aspects of experiential events.
This document discusses the topic of love from various perspectives including psychology, biology, sociology, history and across different cultures. Some key points discussed include:
1. Jung viewed love as involving the ability to endure tensions between opposites in order to grow and transform.
2. Psychology sees love as a combination of passionate and companionate love while biology views it as a mammalian drive influenced by hormones and pheromones.
3. Views and practices of love vary widely across cultures and have changed over time, for example marriage transitioning from an arrangement to one based on love and new legal definitions and options for partnerships.
4. Modern ideas of love involve contradictions between new freedoms and traditional rules
Computer networks allow computers to exchange information by connecting them through a single technology. In a client-server model, more powerful servers store and maintain centralized information, while less powerful clients access information from the server. Peer-to-peer networks have no fixed clients or servers - all computers can communicate directly. Networks can be classified by their transmission technology (broadcast, point-to-point, multicast) and scale (personal area network to wide area network). Common networking devices include repeaters, hubs, bridges, switches and routers that operate at different layers of the networking protocol stack.
Dedy Adrian provides his curriculum vitae, which includes personal details, educational background, training, and extensive work experience as an electrician from 2004 to the present. He has worked on numerous projects in Indonesia, Saudi Arabia, and other locations. His work experience spans a variety of roles and responsibilities, including panel installation, cable work, equipment testing and commissioning, and supervising and training other electricians.
A secure Crypto-biometric verification protocol Nishmitha B
This document describes blind authentication, a secure crypto-biometric verification protocol. It discusses privacy concerns with traditional biometric systems and introduces blind authentication as a way to conduct biometric verification without revealing biometric samples or classifier details. The key features of blind authentication are described, including how enrollment and authentication work based on homomorphic encryption. Experimental results demonstrate the efficiency and accuracy of the proposed approach.
George-Ciprian Petrescu is a Romanian piping design engineer with over 15 years of experience in engineering roles. He has worked on projects for companies such as I.P.I.P S.A., Caspian Proger, Saipem S.p.A., Petrotel-Lukoil S.A., and Energomontaj S.A, with responsibilities including 2D and 3D piping design, achieving project documentation, site surveys, report preparation, and coordinating site activities. He holds a degree in Economic Engineering from Ploiesti Oil and Gas University and skills in AutoCAD, PDMS, SmartPlant3D, Microsoft Office, and other CAD/project
A handbook designed for the students of engineering discipline to learn the basics of engineering Drawing.
Full-text pdf available at
https://www.researchgate.net/publication/283622413_Engineering_Drawing_for_beginners
This document provides an overview of game theory. It defines game theory as the study of how people interact and make decisions strategically, taking into account that each person's actions impact others. It discusses the history and key concepts of game theory, including players, strategies, payoffs, assumptions of rationality and perfect information. It provides examples of zero-sum and non-zero-sum games like the Prisoner's Dilemma. The document is intended to introduce game theory and its basic elements.
This document provides an overview of game theory. It defines game theory as the study of how people interact and make decisions in strategic situations, using mathematical models. It discusses the history and key concepts of game theory, including players, strategies, payoffs, assumptions of rationality and perfect information. It provides examples of zero-sum and non-zero-sum games like the Prisoner's Dilemma. The document also outlines the key elements of a game and different types of game theory, and discusses applications in economics, computer science, military strategy, biology and other fields.
This document provides a brief introduction to game theory concepts, including normal form games, dominant strategies, and Nash equilibrium. It uses examples like the Prisoner's Dilemma and Cournot duopoly to illustrate these concepts. Normal form games represent strategic interactions through payoff matrices. Dominant strategies provide unambiguous best responses. Nash equilibrium is a prediction of strategies where no player benefits by deviating unilaterally. Multiple equilibria can exist in some games.
A brief introduction to the basics of game theoryWladimir Augusto
This document provides a brief introduction to game theory concepts. It discusses normal form games and representations using payoff matrices. It introduces the concepts of dominant strategies and Nash equilibrium as solution concepts. It provides examples of games like the prisoner's dilemma and Cournot duopoly to illustrate these concepts. Dominant strategies make predictions easy, while Nash equilibrium is a stable prediction where no player wants to deviate given what others do. Some games have multiple Nash equilibria.
1. The document provides a brief introduction to the basics of game theory, covering fundamental concepts such as normal form games, dominant strategies, and Nash equilibrium.
2. It uses the prisoners' dilemma game and a Cournot duopoly game to illustrate the concept of a normal form game and dominant strategies. Both games have a unique Nash equilibrium where both players defect.
3. Nash equilibrium is defined as a profile of strategies where each player's strategy is a best response to the other players' strategies. An example advertising game is presented to illustrate the concept of Nash equilibrium.
1) The study examined cooperation rates in repeated prisoner's dilemma games where reward magnitudes were varied. In one game, the cost of cooperating exceeded the discounted benefit, predicting defection. In the other game, the discounted benefit exceeded the cost, predicting cooperation.
2) Over repeated trials, defection increased more in the game where cooperating had a higher cost. Cooperation rates were also higher when participants rated their partner as socially closer.
3) The results provide evidence that social discounting, where rewards to others are valued less the more socially distant they are, can explain cooperation levels in prisoner's dilemma games. Higher cooperation occurred when the discounted benefit of cooperating exceeded the cost.
Game theory seeks to analyze competing situations that arise from conflicts of interest. It examines scenarios of conflict to identify optimal strategies for decision makers. Game theory assumes importance from a managerial perspective, as businesses compete for market share. The theory can help determine rational behaviors in competitive situations where outcomes depend on interactions between decision makers and competitors. It provides insights to help businesses convert weaknesses and threats into opportunities and strengths to maximize profits.
3.3 Game TheoryGame theory is a branch of applied mathematics, w.docxgilbertkpeters11344
3.3 Game Theory
Game theory is a branch of applied mathematics, which deals with multi-person decision making situations. The basic assumption is that the decision makers pursue some well-defined objectives and take into account their knowledge or expectations of the other decision makers’ behavior. Many applications of game theory are related to economics, but it has been applied to numerous fields ranging from law enforcement [19] to voting decisions in European Union [20].
There are two main ways to capitalize game theory. It can be used to analyze existing systems or it can be used as a tool when designing new systems. Existing systems can be modeled as games. The models can be used to study the properties of the systems. For example, it is possible to analyze the effect of different kind of users on the system. The other approach is implementation theory, which is used when designing a new system. Instead of fixing a game and analyzing its outcome, the desired outcome is fixed and a game ending in that outcome is looked for. When a suitable game is discovered, a system fulfilling the properties of the game can be implemented.
Most game theoretical ideas can be presented without mathematics; hence we give only some formal definitions. Also, introduce one classical game, the prisoner’s dilemma which we use to demonstrate the concepts of game theory.
3.3.1 Prisoner’s Dilemma
In the prisoner’s dilemma, two criminals are arrested and charged with a crime. The police do not have enough evidence to convict the suspects, unless at least one confesses. The criminals are in separate cells, thus they are not able to communicate during the process. If neither confesses, they will be convicted of a minor crime and sentenced for one month. The police offer both the criminals a deal. If one confesses and the other does not, the confessing one will be released and the other will be sentenced for 9 months. If both confess, both will be sentenced for six months. The possible actions and corresponding sentences of the criminals are given in Table 3.1.
Criminal 2
Don’t confess
Confess
Criminal 1
Don’t confess
-1,-1
-9,0
Confess
0,-9
-6,-6
Table 3.1: Prisoner’s dilemma
3.3.2 Assumptions and Definitions
Game: A game consists of players, the possible actions of the players, and consequences of the actions. The players are decision makers, who choose how they act. The actions of the players result in a consequence or outcome. The players try to ensure the best possible consequence according to their preferences.
The preferences of a player can be expressed either with a utility function, which maps every consequence to a real number, or with preference relations, which define the ranking of the consequences. With mild assumptions, a utility function can be constructed if the preference relations of a player are known [21].
Rationality: The most fundamental assumption in game theory is rationality. Rational players are assumed to maximize their payoff. If t.
Game theory is a strategic decision-making process that models interactions between two or more players. It is commonly used in economics to analyze industries and competition between firms. Key concepts in game theory include games, players, strategies, payoffs, information sets, equilibriums, assumptions of rationality and payoff maximization. Common solution techniques include backwards induction, Nash equilibriums, mixed strategies, and minimax strategies. Examples discussed include prisoner's dilemmas, zero-sum games, and dominance.
This document provides an overview of game theory concepts including its development, assumptions, classification of games, elements, significance, limitations, and methods for solving different types of games. Some key points:
- Game theory was developed in 1928 by John Von Neumann and Oscar Morgenstern to analyze decision-making involving two or more rational opponents.
- Games can be classified as two-person, n-person, zero-sum, non-zero-sum, pure-strategy, or mixed-strategy.
- Elements include the payoff matrix, dominance rules, optimal strategies, and the value of the game.
- Methods for solving games include using pure strategies if a saddle point exists, or mixed
Game theory is a strategic decision-making process that models interactions between two or more players. It is commonly used in economics to analyze industries and competition between firms. Key concepts in game theory include games, players, strategies, payoffs, information sets, equilibriums, assumptions of rationality and payoff maximization. Common applications discussed are the prisoner's dilemma, zero-sum games, dominant and dominated strategies, Nash equilibriums, mixed strategies, and minimax strategies.
Game theory is a branch of applied mathematics used in economics, political science, and biology to model strategic interactions between individuals. It attempts to mathematically analyze situations where an individual's success depends on the choices of others. Game theory represents interactions using tools like the extensive form, normal form, and characteristic function form. It has been widely applied to study behaviors in fields like economics, political science, biology, and is used both descriptively and normatively. Eight game theorists have won the Nobel Prize in Economics for their contributions to the theory.
This document provides an overview of game theory, including its history, basic concepts, types of strategies and equilibria, different types of games, and applications. It defines game theory as the mathematical analysis of conflict situations to determine optimal strategies. Key concepts explained include Nash equilibrium, mixed strategies, zero-sum games, repeated games, and sequential vs. simultaneous games. Applications of game theory discussed include economics, politics, biology, and artificial intelligence.
GAME THEORY NOTES FOR ECONOMICS HONOURS FOR ALL UNIVERSITIES BY SOURAV SIR'S ...SOURAV DAS
This document provides an overview of game theory concepts including definitions of key terms like mixed strategy, Nash equilibrium, payoff, perfect information, player, rationality, strategic form, strategy, zero-sum game, cooperative games, non-cooperative games, representation of games as normal form, pure vs mixed strategies, two-person zero-sum games, examples of zero-sum games, and using linear programming to determine optimal strategies in a game.
Game theory is the study of strategic decision making between intelligent rational opponents. It assumes players will choose strategies solely to maximize their own welfare. This document discusses game theory concepts including:
- Games involve at least two players in a conflict situation where outcomes depend on the strategies selected.
- Strategies can be pure (deterministic) or mixed (probabilistic). The optimal strategy maximizes a player's payoff.
- Two-person, zero-sum games have a payoff matrix showing each player's gains/losses for all strategy combinations.
- The maximin strategy maximizes a player's minimum payoff while the minimax strategy minimizes their opponent's maximum payoff. Equilibrium occurs when
Game theory is the formal study of strategic decision making between interdependent agents. It provides a framework to model, analyze, and understand strategic situations. The document introduces key concepts in game theory including the prisoner's dilemma, dominance, Nash equilibrium, mixed strategies, extensive games, and zero-sum games. It also discusses the history and applications of game theory, particularly in economics, politics, and information systems.
Game theory is the formal study of strategic decision-making between interdependent agents. The document provides an overview of game theory, including its history, key concepts such as the Nash equilibrium, applications in economics and information systems, and different types of games. It defines games formally and discusses the differences between cooperative and noncooperative game theory, with the latter explicitly modeling the strategic decision process.
This document provides an overview of game theory. It discusses key concepts such as the significance of game theory, essential features, two-person zero-sum games, payoffs and payoff matrices. It also outlines some limitations of game theory, such as assuming a finite number of strategies and knowledge of opponents' strategies. Game theory analyzes strategic decision making between interdependent actors and can be applied to situations like business competition, elections, and sports.
This document provides an overview of game theory concepts including its assumptions, classifications, elements, significance, and limitations. It also describes methods for solving different types of games such as the prisoner's dilemma, 2-person zero-sum games, and pure strategy games. Game theory analyzes strategic decision making among interdependent parties and can provide insights into situations involving conflict or competition between rational opponents.
This document discusses applying ultimatum game theory to resolve water conflicts between agricultural and environmental needs in Iran. Extensive ultimatum game theory involving two strategies, purchasing irrigation water or cutting off water allocation without payment, was evaluated. The major conflicting issues are food production needs and the worsening environmental impacts of drying Lake Urmia.
1.
EC403:
Microeconomics
4
Assessed
Essay
Katherine
Anne
Gilbert
(201135988)
Word
Count:
1992
|
17th
November
2014
2. 2
This
essay
focuses
on
the
theme
of
social
dilemmas
where
the
rational
behavior
of
an
individual
leads
to
a
suboptimal
outcome
from
the
collective
standpoint
(Kollock,
1988).
Robyn
Dawes
(1980)
describes
the
theory
as
having
two
unique
properties:
1)
an
individual
will
receive
a
higher
payoff
if
they
defect
against
the
cooperative
choice
and
2)
all
individuals
will
receive
a
higher
payoff
if
they
all
choose
to
cooperate
than
if
they
all
choose
to
defect.
This
theme
will
be
discussed
through
the
example
of
Robert
and
Stuart
where
a
model
will
be
adopted
to
analyze
their
strategic
situation
through
a
simple
yet
insight-‐rich
process.
The
game
is
played
regarding
the
level
of
effort
Robert
and
Stuart
both
choose
to
exert
into
a
joint
project.
Game
theory
is
defined
as
the
interaction
between
people
in
society
where
interdependent
behaviors
cause
the
action
of
one
person
to
affect
another
person’s
well
being,
either
positively
or
negatively
(Watson,
2013).
In
this
example,
the
effort
level
that
Robert
chooses
to
exert
will
have
an
impact
on
the
value
of
the
project
which
in
turn
affects
the
payoff
to
Stuart
and
vice
versa.
This
interdependence
shows
a
game
is
being
played.
When
acting
independently,
individuals
are
assumed
to
act
rationally
with
the
incentive
to
maximize
their
own
payout.
Rational
behavior
has
two
unique
properties:
1)
from
experience
or
knowledge,
a
belief
is
formed
regarding
the
expected
strategies
of
opponents
2)
given
this
belief;
a
strategy
is
selected
to
maximize
the
expected
payoff
(Watson,
2013).
When
analyzing
mixed
strategies,
the
beliefs
that
are
formed
are
a
probability
distribution
over
opponent’s
possible
effort
level.
As
this
example
is
a
non-‐
cooperative
simultaneous-‐move
game,
players
do
not
fully
internalize
their
chosen
value
of
effort
and
individuals
are
unsure
what
their
opponents
will
choose
therefore
beliefs
are
central
to
individuals
decision
making
process.
The
characteristics
of
this
game
show
there
is
information
asymmetry
in
the
game,
as
players
cannot
observe
opponents
decision
before
taking
theirs.
This
game
will
begin
through
a
discrete
example
of
Robert
and
Stuart
selecting
from
a
finite
choice
of
either
1
or
2
units
of
effort
to
exert
into
the
joint
project.
The
project
value
is
calculated
by
subtracting
the
individual
cost
function
of
Robert
and
Stuart
from
the
value
function,
which
measures
the
cost
minus
the
benefit
from
exerting
a
particular
unit
of
effort.
The
x
value
measures
the
effort
expended
by
Robert
and
the
y
value
measures
the
effort
expended
by
Stuart.
Project
value:
V
(x,
y)
=
5(x
+
y)
+
xy
Project
value
depends
on
the
level
of
effort
exerted
by
Robert
(x)
and
Stuart
(y).
As
Robert’s
cost
function
is
3x2
à
Payoff
function
=
5(x
+
y)
+
xy
–
3x2
As
Stuart’s
cost
function
is
4y2
à
Payoff
function
=
5(x
+
y)
+
xy
–
4y2
3. 3
When
calculating
the
payoffs
to
each
player
from
each
chosen
effort
combination,
the
effort
values
are
substituted
into
the
individual’s
cost
function:
For
V
(1,
1)
!
5(1
+
1)
+
(1
x
1)
=
11
For
V
(2,
1)
!
5(2
+
1)
+
(2
x
1)
=
17
For
V
(1,
2)
!
5(1
+
2)
+
(1
x
2)
=
17
For
V
(2,
2)
!
5(2
+
2)
+
(2
x
2)
=
24
Constructing
the
normal
form
for
this
game
summarizes
the
players
in
the
game,
strategies
available
and
payoff
received
to
each
individual
based
on
the
strategy
combination
the
player’s
choose
(Gibbons,
1992).
The
columns
correspond
to
the
strategies
of
Stuart
and
the
rows
correspond
to
the
strategies
of
Robert.
Normal
Form:
The
underlining
method
identifies
the
rational
best
response
made
by
individuals
if
their
opponent
chooses
a
particular
effort
level.
By
constructing
the
normal
form,
the
Nash
equilibrium
can
be
identified:
Robert
chooses
1
unit
of
effort
and
Stuart
chooses
1
unit
of
effort
at
V(1,
1).
The
Nash
equilibrium
represents
a
point
in
the
game
where
players
have
no
incentive
to
change
their
strategy
and
have
mutually
consistent
best
responses.
For
both
players,
strategy
1
is
the
dominant
strategy
therefore
we
can
predict,
due
to
rational
behavior,
that
neither
player
will
select
strategy
2
(Gibbons,
1992).
The
identification
of
the
best
response
in
this
game
shows
that
both
players
have
the
incentive
to
underperform
and
reduce
their
individual
effort
to
gain
a
higher
payout.
When
analyzing
the
Nash
equilibrium
and
normal
form
of
this
game,
it
is
apparent
that
the
rational
behavior
of
Robert
and
Stuart
does
not
necessarily
imply
coordinated
behavior,
as
the
Nash
equilibrium
is
inefficient
with
both
players
able
to
gain
a
higher
payoff
by
playing
differently.
The
players
realize
they
are
jointly
better
off
if
they
select
1
unit
of
effort,
however
individual
incentives
result
in
individuals
defecting
against
this
choice:
Robert
can
gain
a
payoff
of
13
instead
of
7
and
Stuart
can
gain
a
payoff
of
14
instead
of
8.
In
this
game,
individuals
gain
from
being
non-‐cooperative
and
have
the
incentive
to
free
ride
on
the
contributions
of
others.
R/S
1
2
1
8,
7
14,
1
2
5,
13
12,
8
V
(1,
1)
à
Robert
=
11
–
3
(1)2
=
8
Stuart
=
11
–
4
(1)2
=
7
V
(1,
2)
à
Robert
=
17
–
3
(1)2
=
14
Stuart
=
17
–
4
(2)2
=
1
V
(2,
1)
à
Robert
=
17
–
3
(2)2
=
5
Stuart
=
17
–
4
(1)2
=
13
V
(2,
2)
à
Robert
=
24
–
3
(2)2
=
12
Stuart
=
24
–
4
(2)2
=
8
4. 4
This
result
is
similar
to
the
Prisoner’s
dilemma
where
individual
incentives
interfere
with
the
interests
of
the
group
(Rapoport,
1965)
resulting
in
group
loss
–
this
concept
will
be
analysed
later
in
the
game.
When
opponents
have
complete
freedom
over
their
effort
choices,
the
players
no
longer
choose
from
a
finite
set
of
strategies
and
can
undertake
a
continuous
strategy.
As
the
strategy
spaces
are
continuous
in
this
game,
the
game
can
be
analysed
by
calculating
best
responses
as
opposed
to
through
a
payoff
matrix.
This
is
calculated
by
differentiating
the
individual’s
payoff
functions
and
re-‐
arranging
for
x
and
y
respectively.
The
derivative
is
set
to
0
to
find
where
the
slope
of
this
function
is
maximized
at
zero,
which
is
the
best
response
for
each
individual.
Substituting
the
best
response
function
for
y
into
the
x
function
will
find
the
payoff
for
Robert
and
substituting
the
best
response
function
for
x
into
the
y
function
will
find
the
payoff
for
Stuart.
The
Nash
equilibrium
is
at
point
(
𝟒𝟓
𝟒𝟕
,
𝟑𝟓
𝟒𝟕
),
which
represents
the
set
of
effort
choices
for
Robert
and
Stuart
where
both
players
are
maximizing
their
payoff
given
the
actions
of
the
other
player
(Varian,
1987).
Under
this
equilibrium,
Robert
will
exert
!"
!"
units
of
effort
and
Stuart
will
exert
!"
!"
units
of
effort.
Robert:
f(x)
=
5(x
+
y)
+
xy
–
3x2
f(x)
=
5x
+
5y
+
xy
–
3x2
Differentiate
with
respect
to
x:
f’(x)
=
5
+
y
–
6x
Set
f’(x)
=
0
to
find
optimal
point:
0
=
5
+
y
–
6x
6x
=
5
+
y
x
=
𝟓!𝒚
𝟔
BRr(x)
=
𝟓!𝒚
𝟔
Stuart:
f(y)
=
5(x
+
y)
+
xy
–
4y2
f(y)
=
5x
+
5y
+
xy
–
4y2
Differentiate
with
respect
to
y:
f’(y)
=
5
+
x
–
8y
Set
f’(y)
=
0
to
find
optimal
point:
0
=
5
+
x
–
8y
8y
=
5
+
x
y
=
𝟓!𝒙
𝟖
BRs(y)
=
𝟓!𝒙
𝟖
Substitute
y
into
equation
x:
X
=
(5
+
!!!
!
!
)
6x
=
5
+
!!!
!
48x
=
40
+
5
+
x
47x
=
45
x
=
𝟒𝟓
𝟒𝟕
Substitute
x
into
equation
y:
Y
=
!!
𝟒𝟓
𝟒𝟕
!
8y
=
5
+
𝟒𝟓
𝟒𝟕
376y
=
235
+
45
376y
=
280
y
=
!"#
!"#
y
=
𝟑𝟓
𝟒𝟕
5. 5
Substituting
the
x
and
y
values
into
individual
payoff
functions
and
subtracting
the
effort
costs,
each
partner
receives
the
following
payoff:
From
the
reaction
functions
calculated,
the
relationship
can
be
diagrammatically
presented
by
finding
points
on
Robert
and
Stuart’s
reaction
function.
This
is
calculated
by
setting
the
x
and
y
values
of
Robert
and
Stuart’s
reaction
function
to
0
as
follows:
The
following
graph
depicts
the
best-‐response
functions
of
the
two
players.
When
calculating
the
equilibrium,
the
dominated
strategies
are
removed
and
the
lower
and
upper
bounds
converge
to
the
point
where
the
players’
best
response
functions
cross,
which
is
where
the
equilibrium
point
lies.
These
response
functions
are
positively
sloped
as
they
are
a
complementary
strategy
set.
Robert:
x
=
𝟓!𝒚
𝟔
To
calculate
reaction
function:
When
y
=
0,
x
=
!!!
!
=
!
!
When
x
=
0,
0
=
!!!
!
=
-‐5
Points
on
reaction
function:
(5/6,
0)
and
(0,
-‐5)
Stuart:
y
=
𝟓!𝒙
𝟖
To
calculate
reaction
function:
When
y
=
0,
x
=
!!!
!
=
-‐5
When
x
=
0,
y=
!!!
!
=
!
!
Points
on
reaction
function:
(-‐5,
0)
and
(0,
5/8)
Payoff
Robert:
5x
+
5y
+
xy
-‐
3x2
5(
𝟒𝟓
𝟒𝟕
)
+
5(
𝟑𝟓
𝟒𝟕
)
+
(
𝟒𝟓
𝟒𝟕
)(
𝟑𝟓
𝟒𝟕
)
–
3(
𝟒𝟓
𝟒𝟕
)2
=
6.47
Payoff
Stuart:
5x
+
5y
+
xy
–
4y2
5(
𝟒𝟓
𝟒𝟕
)
+
5(
𝟑𝟓
𝟒𝟕
)
+
(
𝟒𝟓
𝟒𝟕
)(
𝟑𝟓
𝟒𝟕
)
–
4(
𝟑𝟓
𝟒𝟕
)2
=
7.00
(
𝟒𝟓
𝟒𝟕
,
𝟑𝟓
𝟒𝟕
)
Robert’s
Effort
Level
(x)
Stuart’s
Effort
Level
(y)
6. 6
Game-‐theoretic
analysis
generally
assumes
that
each
player
behaves
rationally
according
to
his
preferences
however;
it
does
not
take
into
account
other
motivations
such
as
that
of
the
altruistic
player.
Tony
will
be
introduced
to
this
example
as
the
social
planner
who
has
the
main
objective
of
maximizing
the
total
payoff
of
the
project,
which
is
then
split
between
Robert
and
Stuart.
The
function
used
to
consider
this
game
of
social
welfare
is
the
project
value
function
of
both
Robert
and
Stuart
(5(x
+
y)
+
xy
+
5(x
+
y)
+
xy)
minus
the
two
cost
functions
of
Robert
(3x2)
and
Stuart
(4y2)
to
calculate
the
best
responses
to
maximize
the
total
payoffs
from
the
game.
!
V
(x,
y)
=
5(x
+
y)
+
xy
+
5(x
+
y)
+
xy
–
3x2
–
4y2
!
V
(x,
y)
=
10(x
+
y)
+
2xy
-‐
3x2
–
4y2
The
x
and
y
effort
values
are
calculated
by
substituting
the
x
and
y
figures
into
one
another
as
before.
Robert:
f(x)
=
10(x
+
y)
+
2xy
–
3x2
–
4y2
f(x)
=
10x
+
10y
+
2xy
–
3x2
–
4y2
Differentiate
with
respect
to
x:
f’(x)
=
10
+
2y
–
6x
Set
f’(x)
=
0
to
find
optimal
point:
0
=
10
+
2y
–
6x
6x
=
10
+
2y
x
=
𝟏𝟎!𝟐𝒚
𝟔
Stuart:
f(y)
=
10(x
+
y)
+
2xy
–
3x2
-‐
4y2
f(y)
=
10x
+
10y
+
2xy
–
3x2
-‐
4y2
Differentiate
with
respect
to
y:
f’(y)
=
10
+
2x
–
8y
Set
f’(y)
=
0
to
find
optimal
point:
0
=
10
+
2x
–
8y
8y
=
10
+
2x
y
=
𝟏𝟎!𝟐𝒙
𝟖
Substitute
y
into
equation
x:
X
=
!" ! !
!"!!!
!
!
6x
=
10
+
2(
!"!!!
!
)
48x
=
80
+
20
+
4x
44x
=
100
x
=
!""
!!
x
=
𝟐𝟓
𝟏𝟏
Substitute
x
into
equation
y:
Y
=
!" ! !
!"!!!
!
!
8y
=
10
+
2(
!"!!!
!
)
48y
=
60
+
20
+
4y
48y
=
80
+
4y
44y
=
80
y
=
!"
!!
y
=
𝟐𝟎
𝟏𝟏
7. 7
Payoff
Robert:
5x
+
5y
+
xy
-‐
3x2
5(
𝟐𝟓
𝟏𝟏
)
+
5(
𝟐𝟎
𝟏𝟏
)
+
(
𝟐𝟓
𝟏𝟏
)(
𝟐𝟎
𝟏𝟏
)
–
3(
𝟐𝟓
𝟏𝟏
)2
=
9.09
Payoff
Stuart:
5x
+
5y
+
xy
–
4y2
5(
𝟐𝟓
𝟏𝟏
)
+
5(
𝟐𝟎
𝟏𝟏
)
+
(
𝟐𝟓
𝟏𝟏
)(
𝟐𝟎
𝟏𝟏
)
–
4(
𝟐𝟎
𝟏𝟏
)2
=
11.36
Acting
independently,
Robert
can
gain
a
payoff
of
6.47
and
Stuart
can
gain
a
payoff
of
7,
however,
when
adding
an
altruistic
player
to
maximize
social
welfare,
Robert
can
gain
a
larger
payoff
of
9.09
and
Stuart
can
gain
a
larger
payoff
of
11.36.
This
would
suggest
that
Robert
and
Stuart
should
optimally
act
together
to
ensure
they
both
gain
larger
payoffs
than
if
they
were
acting
independently.
When
comparing
the
effort
levels
of
each
player
to
the
Nash
equilibrium
calculated
when
acting
independently,
the
social
planner
states
the
players
should
exert
more
than
double
the
effort
that
the
players
would
exert
when
acting
independently.
Analysing
in
terms
of
the
effort
to
payoff
ratio,
the
individuals
gain
more
from
acting
independently
than
if
they
were
to
exert
effort
at
the
social
planners
ideal
value:
Robert
exerting
1
effort
unit:
1.67
payoff
acting
independently
and
exerting
1
effort
unit:
4
payoff
acting
socially
optimally;
Stuart
exerting
1
effort
unit:
9.5
payoff
acting
independently
and
exerting
1
effort
unit:
6.3
payoff
acting
socially
optimally.
8. 8
It
is
evident
that
the
addition
of
the
social
planner
to
the
game
can
result
in
effort
levels
chosen
that
will
increase
the
total
payoff
function
for
the
players.
The
choice
for
players
is
whether
to
cooperate
with
the
social
planners
ideal
outcome
or
whether
to
defect
with
the
belief
that
their
opponent
will
cooperate.
As
Kollock
(1998)
identified,
the
best
outcome
of
a
Prisoner’s
Dilemma
is
unilateral
defection
of
the
first
person,
followed
by
mutual
cooperation,
mutual
defection,
and
the
worst
outcome
is
the
first
person’s
unilateral
cooperation.
The
following
analysis
calculates
the
payoffs
of
Robert
and
Stuart
if
1)
Robert
cooperates
and
Stuart
defects
and
2)
if
Stuart
cooperates
and
Robert
defects
from
the
social
ideal.
Normal
Form:
The
final
normal
form
presents
the
payoffs
to
each
individual
based
on
the
range
of
scenarios
presented
throughout
this
example.
The
Nash
equilibrium
is
defection
against
the
social
planners
ideal
as
it
the
dominant
strategy
for
both
players.
R/S
C
D
C
11.4,
9.09
2.5,
14.7
D
13,
3.6
7.0,
6.5
When
Robert
cooperates
with
socially
optimal
input
(
𝟐𝟓
𝟏𝟏
)
and
Stuart
defects:
Y
=
! !
𝟐𝟓
𝟏𝟏
!
Y
=
0.91
Joint
value
of
project:
5((
𝟐𝟓
𝟏𝟏
)
+
(0.91))
+
(
𝟐𝟓
𝟏𝟏
)(0.91)
=
18
Payouts:-‐
Robert:
18
–
3(
𝟐𝟓
𝟏𝟏
)2
=
2.5
Stuart:
18
–
4(0.91)2
=
14.7
When
Stuart
cooperates
with
socially
optimal
input
(
𝟐𝟎
𝟏𝟏
)
and
Robert
defects:
X
=
! !
𝟐𝟎
𝟏𝟏
!
X
=
1.14
Joint
value
of
project:
5((1.14
+
(
𝟐𝟎
𝟏𝟏
))
+
(1.14)(
𝟐𝟎
𝟏𝟏
)
=
16.9
Payouts:
Robert:
16.9
–
3(1.14)2
=
13
Stuart:
16.9
–
4(
!"
!!
)2
=
3.6
9. 9
This
example
is
similar
to
the
prisoners’
dilemma.
The
dilemma
is
clear
when
noticing
that
mutual
cooperation
is
superior
and
yields
a
better
outcome
than
mutual
defection
of
both
players.
This
results
in
mutual
defection
not
being
a
rational
outcome
because
the
choice
to
cooperate
is
more
rational
from
a
self-‐
interested
point
of
view.
The
value
of
the
project
suffers
as
partners
only
care
about
their
own
costs
and
benefits
and
they
do
not
consider
the
benefit
of
their
labor
to
the
rest
of
the
firm.
The
success
of
the
enterprise
requires
cooperation
and
shared
responsibility
of
the
individuals.
In
this
example,
there
are
limits
on
external
enforcement
as
the
partners
cannot
write
a
contract
and
have
no
way
of
verifying
the
levels
of
effort
exerted
by
each
individual.
Even
if
the
players
had
the
ability
to
communicate
before
the
game
and
decide
on
a
collective
decision,
there
is
no
incentive
for
a
rational
player
to
follow
through
on
the
agreement
as
individuals
could
maximize
by
defecting.
Players
understand
that
increasing
effort
and
therefore
the
value
of
the
joint
project
will
result
in
them
only
gaining
a
fraction
of
the
joint
benefit
therefore
the
players
are
less
willing
to
provide
effort.
The
individuals
therefore
expend
less
effort
than
is
best
from
the
social
point
of
view
and
because
both
players
do
so,
they
both
end
up
worse
off.
As
this
example
only
considered
a
single
play
game,
choosing
to
cooperate
is
not
optimal
for
players.
If
the
example
incorporated
repeated
game
analysis,
including
the
punishment
of
the
opponent
for
defecting
would
reduce
the
payoffs.
This
could
result
in
players
choosing
to
cooperate
if
costs
>
benefits
by
defecting.
10. 10
As
individuals’
indifference
curves
depend
on
other
people
(Buchanan,
1962),
this
game
results
in
the
players
imposing
external
effects
on
their
opponent
based
on
the
decision
they
choose.
Externalities
are
defined
as
an
indirect
consequence
of
an
activity,
which
affect
agents
other
than
the
originator
without
intension
(Laffont,
2008).
In
this
example,
Robert
and
Stuart’s
payoff
depends
on
the
effort
exerted
by
the
other
player,
which
is
an
example
of
a
positive
externality
or
external
benefit
to
the
other
player.
As
players
increase
their
effort,
the
value
of
the
overall
project
increases
which
increases
the
payoffs
to
both
players.
When
calculating
the
effort
to
payoff
ratio,
there
is
a
2.8
payoff
difference
when
Robert
and
Stuart
exert
one
unit
of
effort:
Robert
gains
6.7
payoffs
and
Stuart
gains
9.5
payoffs.
It
is
clear
that
Stuart
benefits
more
from
exerting
one
unit
of
effort
and
therefore
Robert
exerts
a
higher
positive
externality
on
Stuart.
The
existence
of
externalities
can
cause
market
failure
if
the
price
mechanism
does
not
take
into
account
the
full
social
costs
and
benefits
of
production
and
consumption.
In
this
game,
there
is
a
difference
between
the
marginal
private
benefit
and
marginal
social
benefit
resulting
in
the
MSB
curve
lying
above
MPB.
The
effort
exerted
and
therefore
the
market
output
is
less
than
the
socially
optimal
output
as
shown
in
Appendix
1
-‐
society
could
be
better
off
and
welfare
increased
by
encouraging
increased
provision.
There
is
therefore
community
pressure
to
make
individuals
pull
their
weight
to
bring
the
effort
levels
to
the
socially
optimal
ideal.
A
method
of
creating
this
pressure
is
to
provide
a
subsidy
to
the
individuals
or
reward
the
individuals
to
provide
at
this
point
[Appendix
2]
bringing
MSB
=
MPB.
11. 11
REFERENCES
Buchanan,
J.
&
Stubblebine,
W.
(1962).
Externality.
Economica.
29
(116),
371-‐384.
Dawes,
R.
(1980).
Social
Dilemmas.
Annual
Review
of
Psychology.
31,
169-‐193.
Gibbons,
R
(1992).
A
Primer
in
Game
Theory.
London:
Pearson
Education
Limited.
Kollock,
P.
(1998).
Social
Dilemmas:
The
Anatomy
of
Cooperation.
Annual
Review
of
Sociology.
24
(1),
183-‐214.
Laffont,
J.
(2008).
Externalities.
The
New
Palgrave
Dictionary
of
Economics.
2.
Rapoport,
A
(1965).
Prisoner's
Dilemma:
A
Study
in
Conflict
and
Cooperation.
USA:
The
University
of
Michigan
Press.
Varian,
H.;
1987;
“Intermediate
Microeconomics
–
A
Modern
Approach;
Norton,
Chapter
27
pp.
508
Vicarick.
(2011).
Externalities
Graphs:
How
I
Understand
Them.
Available:
http://www.slideshare.net/vicarick/externalities-‐graphs-‐how-‐i-‐understand-‐
them.
Last
accessed
14th
Nov
2014.
Watson,
J
(2013).
Strategy:
An
Introduction
to
Game
Theory.
3rd
ed.
New
York:
W.
W.
NORTON
&
COMPANY.
ADDITIONAL
BIBLIOGRAPHY
Carmichael,
F
(2005).
A
Guide
to
Game
Theory.
ENGLAND:
Pearson
Education
Limited.
Dixit,
A.,
Skeath,
S.
&
Reiley,
D
(2009).
Games
of
Strategy.
3rd
ed.
New
York:
W.
W.
Norton
&
Co.
Osborne,
M
(2004).
An
introduction
to
game
theory.
New
York:
Oxford
University
Press.