GEMATMW (A71)

Game Theory

- is the study of strategic decision-making, this is used in economics, political science, military science,
psychology and other fields.

Examples:

1. Two suspected criminals are caught by the police and interrogated in separate rooms. They were
told;

a) If both of you confess, each of you will go to jail for 10 years.

b) If only one confess, then the one who confesses goes to jail just for 1 year and the other
goes to jail for 25 years.

c) If neither confesses, each goes to jail for 3 years.

We construct a payoff table:

Prisoner B

Confess Don’t Confess

Prisoner A Confess 10,10 1,25

Don’t Confess 25,1 3,3

Maximin Solution

 It involves choosing the strategy that gives you the maximum possible payoff

 Best result for himself

Maximin Method

 To get the maximin possible payoff the player looks at the minimum possible payoff (the worst
results and then compares)

Use the Maximin Method to determine the Maximum Possible Payoff for Player A. We construct a
table of Minimum Possible Possible Payoff.

Minimum Possible Payoff for Player A

Confess 10

Don’t Confess 25

According to the table Player A will choose to confess.

2. Suppose we have the following for a two-player game,

 Player A

O T W

Player B O 1,1 3,4 2,1

T 2,4 2,5 8,3

W 3,3 0,4 0,9

Use the Maximin Method to determine the maximum possible payoff for Player B. We construct a
table of Minimum Possible Payoff.

Minimum Possible Payoff for Player B

O 1

T 2

W 0

According to the table, Player B should choose action T.

Methods of Voting

 Majority Rule Method - 50% + 1

Examples:

1. Three locations for the new season of a TV program are being considered:

a) Baler (B)

b) Camiguin (C) and,

c) Vigan (V)

The preference table for 37 studio executives and production team members is shown below:

Number of Votes
 B C V

1st Rank 18 5 14

2nd Rank 15 9 13

3rd Rank 4 23 10

In the Majority Rules Method, the candidate which receives more than 50% of 1st rank votes wins the
election. If we are using the majority rule method, which place wins the election: Baler, Camiguin or
Vigan?

(50%)(37) = 18.5

The candidates should get at least 19 for first rank votes.

Answer: No one wins the election.

In the Plurality Method, the candidate who receives the most first-rank votes wins the election.

In our example, if we are using the Plurality Method which place wins the election?

Answer: Baler