Game Theory

UG3, 1st Term 2013

Presidency University

Lecturer: Indrajit Ray

Email: i.ray@bham.ac.uk
Ph: 033-26324397

LECTURE 1: MIXED AND BEHAVIORAL STRATEGIES

Simultaneously played games: Normal /Strategic form
Players: N = {1, ...., n}; Actions (pure strategies): S1 .... Sn (Finite game if Sis are finite)
Outcomes (depending on everybodys action); Preferences (utility/payoff numbers)
Complete description of the situation: Rules of the game: G = < N, S1, ..., Sn, U1, ..., Un >
Sequentially played games: Extensive form: Game Tree (Complete description)
Nodes, Terminal nodes, Branches, Path
Information
Complete: no private info (before the game starts); Incomplete
Perfect: no uncertainty during the game; Imperfect
Complete and Perfect: Board games
Imperfect Information: Uncertainty during the game
Example 1: Player 1 picks a card (red/black). He wins if red. Can raise or fold. If
raises, player 2 (doesnt know the colour) can meet or pass
Example 2: Players 1 and 2 must decide whether or not to carry an umbrella when
leaving home. They know that there is a 50-50 chance of rain. Each players payoff is -5
if he doesnt carry an umbrella and it rains, -2 if he carries an umbrella and it rains, - 1 if
he carries an umbrella and it is sunny, and 1 if he doesnt carry an umbrella and it is
sunny. Player 1 learns the weather before leaving home; player 2 does not, but he can
observe player 1's action before choosing his own.
Information set
Examples
Perfect information: Split 10 game
Imperfect information: above games (Examples 1 and 2 above)
Strategy and Action
Action: move (do something) when you have to.
Strategy: A COMPLETE plan: what to do (an action) in each information set
Card Game: 4 strategies for player 1: RR, RF, FR, FF
Umbrella Game: 4 strategies for each player
Normal Form Representation
Players, Strategy: Complete plan (What to do at every information set), Expected payoffs
Multi-Agent Representation
Players in different info sets are different; Multi-agents have same payoff/utility.
Assumptions: Common Knowledge; Perfect Recall
Mixed Strategy
Probability Distribution over the pure strategies: (Si): 0.4T, 0.6B is a mixed strategy
Interpretation: 1. Randomly chosen (Toss a coin) 2. Belief over the others
Mixed and Behavioral Strategy in Extensive Games
A strategy is a complete plan in an extensive form game. A mixed strategy thus is a
distribution over plans. A behavioural strategy allows mixing at every information set.
Mixed and Behavioral plans are equivalent. Example: Umbrella Game

Game Theory
UG3, 1st Term 2013
Presidency University

Lecturer: Indrajit Ray

Email: i.ray@bham.ac.uk
Ph: 033-26324397

LECTURE 2: EQUILIBRIUM IN MIXED STRATEGIES

Nash Equilibrium (in mixed strategies)
Best Response Analysis

0,0

7,2

P
2,7
6,6
Best Response against mixed strategies
BR1 (1/2A, 1/2P) =
BR2 (1/3A, 2/3P) =
NE in mixed strategies: is NE if for all i, i is the BR against -i
How to find a mixed NE?
i is the BR if and only if all the pure strategies in the support (on which the player is
mixing) must be BR as well. Indifferent (Otherwise he would not mix)
Two indifference equations:
Find the mixed strategy Nash equilibrium of the following game

u, v

l, m

B
w, x
Theorem (Nash): NE (in mixed strategies) always exists.

y, z

More than 2x2

L

0, 4

5, 6

8, 7

2, 9

6, 5

5, 1

Similarly, one can find NE (in behavioral strategies) in extensive form games.

Game Theory
UG3, 1st Term 2013
Presidency University

Lecturer: Indrajit Ray

Email: i.ray@bham.ac.uk
Ph: 033-26324397

ASSIGNMENT 1: MIXED AND BEHAVIORAL STRATEGIES

1. Consider the card game (discussed in the lecture). Now allow player 1, after he looks
at his card, either to raise 1, raise 0.75 or to pass. If player 1 raises, then player 2
knows the amount that player 1 has added and must choose either to meet the raise by
putting in the same additional amount or to pass. As before, player 1 wins if he has a red
card or if player 2 passes after a raise. Model this game in extensive form. Write this
game in normal form.
2. Consider the extensive form depicted in the following tree. What are the information
sets for the two players? Write this game in normal and agent-normal forms.
1
L

2
a
3, 2

2
b

2, 1 1, 2

r
1, 4

l
2, 1

r
2, 4

3. Consider the following extensive form game. What are the information sets for the two
players? Construct the normal form of the following game.

Game Theory
UG3, 1st Term 2013
Presidency University

Lecturer: Indrajit Ray

Email: i.ray@bham.ac.uk
Ph: 033-26324397

ASSIGNMENT 2: EQUILIBRIUM IN MIXED STRATEGIES

1. Consider the following three-player game and find all pure Nash Equilibria. Can you
find any Nash equilibrium in which exactly two of the three players play a pure strategy
while the other plays a mixed strategy (such as (B, R, X Y)).
X
Y
L

0, 0, 0

6, 5, 4

5, 4, 6

0, 0, 0

4, 6, 5

0, 0, 0

0, 0, 0

0, 0, 0

2. Prove that the following game has a unique Nash equilibrium in pure strategies
however, has no mixed Nash equilibrium.
L

1, -2

-2, 1

0, 0

-2, 1

1, -2

0, 0

0, 0

0, 0

1, 1

3. There has been a road accident and there are n many people in the vicinity, anyone of
who can call an ambulance. The ambulance will come if at least one of the n people calls.
Simultaneously and independently, each of the n people decides whether or not to call.
Each person gets a utility v if someone calls, however those who call pay a cost of c (c <

v). That is, if any person i calls, then he gets v - c; if person i does not call but at least
another person calls, then person i gets v; finally if nobody calls, then everyone gets 0.
Suppose p is the probability that any person decides to call. Find the mixed strategy Nash
equilibrium value of probability p that in equilibrium each person uses to call. What is the
probability that the ambulance comes in this equilibrium?
4. Show that in the following game, two types of profiles below are NE: (i) player 1
chooses D, 2 chooses C with probability at least 1/3 and player 3 chooses L (ii) where
player 1 chooses C, player 2 chooses C and 3 chooses R with probability at least .