Game Theory (Part 2)

## Game Theory (Part 2)

#### John Baez

Last time we classified games in a few ways. This time we'll start by looking at a very simple class of games: simultaneous noncooperative two-player games.

### Simultaneous games

Remember that in a simultaneous game, each player makes their moves without knowing anything about the other player's move. Thanks to this, we can condense each player's move into a single move. For example, in a card game, if one player lays down a king and then an ace, we can mathematically treat this as a single move, called "lay down a king and then an ace". So, we'll say each player makes just one move — and they make it without knowing the other player's move.

In class we'll play these games like this. I will decide on my move and write it down on a piece of paper. You'll make your move and click either A,B,C,D, or E on your clicker.

Then I'll reveal my piece of paper! At that point, we'll each know what both of us did... but neither of us can change our move.

So, we each make our move without knowing each other's move.

### Two-player games

Since lots of you will be clicking your clicker at once, you could say there are more than two players in this game. But your payoff — the number of points you win or lose — will depend only on what you did and what I did. So, we can treat this game as a bunch of independent two-player games — and that's what we'll do.

### Noncooperative games

Remember, we use words in funny ways in mathematics! An 'imaginary' number is not imaginary in the usual sense; a 'partial' differential equation isn't just part of a differential equation, and so on. In game theory we use the word 'noncooperative' in a funny way. We say a game is noncooperative if the players aren't able to form binding commitments. This means that when we play our games, you and I can't talk before the game and promise to do certain things.

There will, however, be games where both of us win if we make the right choice, and both of us lose if we don't! In games like this, if we can figure out how to cooperate without communicating ahead of time and making promises, that's allowed!

### Chicken

Now let's actually look at an example: the game of chicken. In this game we drive toward each other at high speed along a one-lane road in the desert. The one who swerves off the road at the last minute gets called a chicken, and the other driver gets called a hero. If we both swerve off the road at the last minute, we're both called chickens. But if neither of us does, our cars crash and we both die!

Sounds fun, eh?

In real life we could each wait as long as possible and see if the other driver starts to swerve. This makes chicken into a sequential rather than simultaneous game! You could also promise that you wouldn't swerve. This makes chicken into a cooperative game!

Indeed there are all sorts of variations and complications in real life. You can see some in the famous movie Rebel Without a Cause, starring James Dean. Take a look at what happens:

This movie version actually involves driving toward a cliff and jumping out at the last possible moment.

But mathematics, as usual, is about finding problems that are simple enough to state precisely. So in our simple mathematical version of chicken, we'll say each player has just two choices:

1: stay on the road. 2: swerve off the road at the last second.

Also, we'll express our payoffs in terms of numbers. A negative payoff is bad, a positive one is good:

• If either player swerves off the road they get called a chicken, which is bad, so let's say they get -1 points.

• If one player stays on the road and other swerves off the road, the one who stays on the road gets called a hero, so let's say they get 1 point.

• If both players stay on the road they both die, so let's say they both get -10 points. We can summarize all this in a little table:

 1 2 1 (-10,-10) (1,-1) 2 (-1,1) (-1,-1)

Let's say the players are you and me. Your choices 1 and 2 are shown in in black: you get to pick which row of the table we use. My choices 1 and 2 are in red: I get to pick which column of the table we use.

There are four possible ways we can play the game. For each of the four possibilities we get a pair of numbers. The first number, in black, is your payoff. The second, in red, is my payoff.

For example, suppose you choose 1 and I choose 2. Then you're a hero and I'm a chicken. So, your payoff is 1 and mine is -1. That's why we get the pair of numbers (1,-1) in the 1st row and 2nd column of this table.

Now let's play this game a bit! Later we'll study it in different ways.

### Rock-paper-scissors

Here's another famous game: rock-paper-scissors.

Each player can choose either rock, paper or scissors. Paper beats rock, scissors beats paper, and rock beats scissors. In these cases let's say the winner gets a payoff of 1, while the loser gets a payoff of -1. If both players make the same choice, it's a tie, so let's say both players get a payoff of 0.

Here's a table that describes this game:

 rock paper scissors rock (0,0) (-1,1) (1,-1) paper (1,-1) (0,0) (-1,1) scissors (-1,1) (1,-1) (0,0)

Your choices and payoffs are in black, while mine are in red.

For example, if you choose rock and I choose paper, we can look up what happens, and it's (-1,1). That means your payoff is -1 while mine is 1. So I win!

To make this table look more mathematical, we can make up numbers for our choices:

1: rock 2: paper 3: scissors

Then the table looks like this:

 1 2 3 1 (0,0) (-1,1) (1,-1) 2 (1,-1) (0,0) (-1,1) 3 (-1,1) (1,-1) (0,0)

Let's play this game a bit, and then discuss it!

### Normal form

In the games we're studying now, each player can make various choices. In game theory these choices are often called pure strategies. We'll see why later on in this course.

In our examples so far, each player has the same set of pure strategies. But this is not required! You could have some set of pure strategies and I could have some other set.

For now let's only think about games where we both have a finite set of pure strategies. For example, you could have 4 pure strategies and I could have 2. Then we could have a game like this:

 1 2 1 (0,0) (-1,1) 2 (2,-1) (0,0) 3 (-2,1) (1,-1) 4 (0,1) (2,0)

This way of describing a game using a table of pairs of numbers is called normal form, and you can read about it here:

Normal-form game, Wikipedia.

There are other ways to describe the same information. For example, instead of writing

 1 2 1 (0,0) (-1,1) 2 (2,-1) (0,0) 3 (-2,1) (1,-1) 4 (0,1) (2,0)

we can write everything in black:

 1 2 1 (0,0) (-1,1) 2 (2,-1) (0,0) 3 (-2,1) (1,-1) 4 (0,1) (2,0)

All the information is still there! It's just a bit harder to see. The colors are just to make it easier on you.

Mathematicians like matrices, which are rectangular boxes of numbers. So, it's good to use these to describe normal-form games. To do this we take our table and chop it into two. We write one matrix for your payoffs:

$$A = \left( \begin{array}{rr} 0 & -1 \\ 2 & 0 \\ -2 & 1 \\ 0 & 2 \end{array} \right)$$

and one for mine:

$$B = \left( \begin{array}{rr} 0 & 1 \\ -1 & 0 \\ 1 & -1 \\ 1 & 0 \end{array} \right)$$

The number in the ith row and jth column of the matrix $$A$$ is called $$A_{i j}$$, and similarly for $$B$$. For example, if you pick choice 3 in this game and I pick choice 2, your payoff is

$$A_{32} = 1$$

and my payoff is

$$B_{32} = -1$$

### Definition

Let's summarize everything we've learned today! Remember, an $$m \times n$$ matrix has $$m$$ rows and $$n$$ columns. So, we can say:

Definition. A 2-player normal-form game consists of two $$m \times n$$ matrices of real numbers, $$A$$ and $$B.$$

This definition is very terse and abstract. That's what mathematicians like! But we have to unfold it a bit to understand it.

Let's call you 'player A' and me 'player B'. Then the idea here is that player A can choose among pure strategies $$i = 1,2,\dots , m$$ while player B can choose among pure strategies $$j = 1,2,\dots, n.$$ Suppose player A makes choice $$i$$ and player B makes choice $$j.$$ Then the payoff to player A is $$A_{i j},$$ and the payoff to player B is $$B_{i j}.$$