Game Theory

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The Game Theory is the study of how people behave in

strategic situations.

It is attempts to mathematically capture behaviours in strategic

situations, in which an individual’s success in making choices

depends on the choices of others.

Strategic decisions are those in which each person, in deciding

what to take, must consider how others might respond to that

action.

I am going to provide an example in which players make

domain strategy regardless of others’ decisions, and this will

make you fully understand.

The Game TheoryThe Game Theory

The Prisoners’ Dilemma provides

insight into the difficulty in maintaining

cooperation.

Often people or firm fail to cooperate

with one another even when

cooperation would make them better

off.

The prisoners’ dilemma is a particular

“game” between two captured prisoners

that illustrate why cooperation is

difficult to maintain even when it is

mutually beneficial.

Prisoners’ DilemmaPrisoners’ Dilemma

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Suppose there are 2 criminals- Mike and Alex.

The police have caught them on a weapons’ charge which the punishment is 1 year.

The police suspect they robbed a bank, but lack of evidence, therefore, they need one or both of them to confess.

They separate the criminals and offer each of them the same deal:

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• If you confess to the bank robbery. I’ll let you go free and your partner will get 20 years in jail.

• If you both confess, we won’t have to go to trial so you will each get 8 years in jail.

• If neither of you says anything, we’ve got you on the weapons’ charge, so you will each get 1year in jail.

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• If Alex choose to confess, Mike will confess too, for -8 > -20.

• If Ales choose to keep silent, Mike will confess anyways, for 0 > -1.

• If Mike choose to confess, Alex will confess too, for -8 > -20.

• If Mike choose to keep silent, Alex will confess anyways, for 0 > -1.

For both criminals, their dominant strategy* is the same:For both criminals, their dominant strategy* is the same:

They should confess, rather than risk that the other will confess if they They should confess, rather than risk that the other will confess if they keep silent.keep silent.

* The dominant strategy is the best strategy for a player to follow regardless of the strategies chosen by the other players.

100%

People will choose Dominant Strategy 100%,People will choose Dominant Strategy 100%,

regardless others’ Strategies.regardless others’ Strategies.

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References and Works Cited

Info:Info:

● ● http://en.wikipedia.org/wiki/Game_theory

Images:Images:

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*5:http://fs01.bokee.net/userfilespace/2006/11/18/*5:http://fs01.bokee.net/userfilespace/2006/11/18/zdylawyer230710.jpgzdylawyer230710.jpg

*6:http://www.cartoonstock.com/lowres/sea0757l.jpg*6:http://www.cartoonstock.com/lowres/sea0757l.jpg

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