1. Games of pure conflict two person constant sum

2. Two person constant sum game
Sometimes called zero-sum game.
The sum of the players’ payoffs is the same, no matter what pair of actions they take.

3. Maximin strategy
One way to play a game is to take a very cautious view.
Your payoff from any action depends on other’s actions.
In a two-player game, you might assume other player always does what is worst for you.
Given that assumption, you would choose the strategy such that gives you the best income if the other player always does what is worst for you given your strategy.

4. 1,0 Simple hide and seek 0, 1 0,1 1,0 Is this a constant sum game?
Player 2 (Seeker)
Look Upstairs Look Downstairs
1,0
0, 1 p
Hide upstairs
Hide downstairs
0, ,0
Player 1 (Hider)
Is this a constant sum game?
A) Yes B) No

5. .9, .1 Penalty Kick .5, .5 .3 , .7 .8, .2 Is this a constant sum game?
Goalkeeper
Jump Left Jump Right
.9, .1
.5, .5
.3 , , .2
Kick Left
Kick right
Shooter
Is this a constant sum game?
A) Yes B) No

6. Going to the Movies 3,2 1,1 0,0 2,3 Bob Movie A Movie B Movie A Alice
Is this a constant sum game?
Yes No
Maybe

7. Mixed strategies and maximin
Suppose you are hider, choosing a mixed strategy, and you believe that seeker will do what is worst for you, given your mixed strategy.
This is not a silly assumption in a two-player zero sum game, because what is worst for you is best for your opponent.
The maximin player will choose her best mixed strategy given that she believes opponent will respond with the strategy that is worst for her.

8. Clicker question
Suppose that you are hider and you choose to hide upstairs with probability .6. What strategy by seeker is worst for you?
Look upstairs with probability .6
Look upstairs and downstairs with equal probability
Look upstairs for sure
Look upstairs with probability .4

9. Clicker question
If you are hider and hide upstairs with probability .6 and seeker uses the strategy that is worst for you, what is your expected payoff? .6 .4 .5
.35

10. More generally
If you are hider and you hide upstairs with probability p>1/2, what is the strategy for seeker that is worst for you?
What is your expected payoff if he does that?

11. What is you hide upstairs with p<1/2?
What is worst thing that seeker can do to you?
(He’ll look downstairs for sure.)
What is your expected payoff?

12. Maximin for hide and seek

13. The pessimist’s view

14. Penalty Kick
Goalkeeper
Jump Left Jump Right
.9, .1
.5, .5
.3 , , .2
Kick Left
Kick right
Shooter
Let’s look from pessimistic shooter’s view

15. Shooter’s View

16. Clicker question
If shooter randomly chooses left with probability p>4/9, what Goalie strategy is worst for shooter
Jump left
Jump right
Jump left with same probability that shooter shoots left
Jump left with probability ½, right with probability ½.

17. Clicker question
If Shooter shoots left with probability p, what is the best response for Goalie.
Jump left with probability p
Jump left with probability ½
Jump left for sure if p>5/9, right if p<4/9
Jump left with probability 1-p

18. Constant sum games and Maximin
Note that when shooter uses maximin strategy, his own payoff is the same for either response by Goalkeeper.
If shooter’s payoff is the same from both strategies, so is goalkeeper’s. (Why?)
If goalkeeper’s strategy is same from both strategies, goalkeeper is willing to randomize.

20. Clicker Question
If Goalie jumps left with probability ½, what strategy by Shooter is worst for Goalie?
Shoot left
Shoot right
Shoot left or right with equal probability

21. Clicker question
What strategy by Goalie makes Shooter equally well off from shooting left or right?
Jump left with probability ½
Jump left with probability 2/3
Jump left with probability 1/3

22. Summing up In Maximin equilibrium:
Shooter shoots to left with probability 4/9
Goalkeeper jumps left with probability 1/3
Shooter scores with probability .663
Goalkeeper makes save with probability .366
Maximin is also a Nash equilibrium in zero sum games

23. Maximin and the movies
Bob
Movie A
Movie B
3,2
1,1
0,0
2,3
Movie A
Alice
Movie B
This is not a constant sum game. Maximin equilibrium is not a Nash equilibrium.

24. Alice’s View

25. Maximin equilibrium
Symmetric story for Bob. In maximin equlibrium each is equally likely to go to either movie.

26. If Alice is equally likely to go to Movie A or Movie B, what is Bob’s best response?
Randomize with probability ½
Go to Movie B
Go to Movie A

27. Is the maximin equilibrium for Alice and Bob a Nash equilibrium?
Yes No

28. Some more Problems

29. Advanced Rock-Paper-Scissors
0,0
-1,1
2,-2
1,-1
-2,2
Are there pure strategy Nash equilibria?
Is there a symmetric mixed strategy Nash equilibrium?
What is it?

30. Finding Mixed Strategy Nash Equilibrium
Rock
Paper
Scissors
0,0
-1,1
2,-2
1,-1
-2,2
Let probabilities that column chooser chooses rock, paper, and scissors be r, p, and s=1-p-r
Row chooser must be indifferent between rock and paper
This tells us that -p+2(1-p-r)=r-(1-p-r)
Row chooser must also be indifferent between rock and scissors.
This tells us that –p+2(1-p-r)=-2r+p
We have 2 linear equations in 2 unknowns. Let’s solve.
They simplify to 4r+4p=3 and 4p=2.
So we have p=1/2 and r=1/4. Then s=1-p-r=1/4.

31. Problem 7.7 Find mixed strategy Nash equilibia
For player 1, Bottom strictly dominates Top. Throw out Top
Then for Player 2, Middle weakly dominates Right. Therefore if
Player 1 plays bottom with positive probability, player 2 gives zero
Probability to Right.
There is no N.E. in which Player 1 plays Bottom with zero probability, (Why?)
(If he did, what would Player 2 play? Then what would 1 play?)

32. More mechanically
Suppose player 1 goes middle with probability m and bottom with probability 1-m.
Then expected payoffs for player 2 are:
1m+3(1-m) for playing left
3m+2(1-m) for playing middle
1m+2(1-m) for playing right
We see that playing right is worse than playing middle if m>0.
So let’s see if there is a mixed strategy Nash equilibrium where Player 2 plays only left and middle and Player 1 is willing to play a mixed strategy.

33. Does this game have a Nash equilibrium in which Kicker mixes left
and right but does not kick to center?

34. If there is a Nash equilibrium where kicker
never kicks middle but mixes between left and
right, Goalie will never play middle but will
mix left and right (Why?)
If Goalie never plays middle but mixes left
and right, Kicker will kick middle. (Why?)
So there can’t be a Nash equilibrium where
Kicker never kicks Middle. (See why?)

35. Problem 4: For what values of x is there a mixed strategy Nash equilibrium in which the victim might resist or not resist and the Mugger assigns zero probability to showing a gun?

36. Mugger’s Game
If there is a Nash equilibrium in which mugger does not show gun and both mugger and victim have mixed strategies, it must be that the mugger’s payoff in this equilibrium is at least as high as that of showing a gun.

37. Mixed strategy equilibrium with no visible gun
Resist
Don’t resist
No Gun
2,6
6,3
Hidden Gun
3,2
5,5
Note that there is no pure strategy N.E.
If Victim resists with probability p then
Mugger’s expected payoff from having no gun is
2p+6(1-p)=6-8p
Mugger’s expected payoff from having a hidden gun is 3p+5(1-p)=5-2p
Mugger will use a mixed strategy only if 6-8p=5-2p, which implies p=1/6.
If p=1/6, the expected payoff from not showing a gun is 14/3.

38. Mugger’s Game If mugger shows gun, he is sure to get a payoff of x.
If victim’s strategy is to resist with probability p if he doesn’t see a gun, then expected payoff to mugger from not showing a gun is
14/3.
So there is a mixed strategy N.E. where mugger doesn’t show gun if x≤ 14/3.

39. Entry
N players consider entering a market. If a firm is the only entrant its net profit is 170.
If more than one enter each has net profit 30.
If a firm stays out it has net profit 60.
Find a symmetric Nash equilibrium.
In symmetric N.E. each enters with same probability p.

40. Equilibrium
Let q=1-p. If a firm enters, the probability that nobody else enters is qN-1 If nobody else enters, your profit is 170. If at least one other firm your expected profit is 10. So if you enter, your expected profit is 170qN-1+10(1-qN-1) If you don’t enter your expected profit is 60. So there is a mixed strategy equilibrium if 170qN-1+10(1-qN-1)=60, which implies that 160qN-1=50 and q=(5/16)1/N-1 Then p=1-q=1-(5/16)1/N-1

41. Saddam and UN (Let’s Pretend Saddam had WMD’s)
Part a) Saddam is hiding WMDs in location X, Y, or Z. UN can look either in X AND Y or in Z. All Saddam cares about is hiding. All UN cares about if finding. This reduces to a simple hide and seek game. Only trick: Saddam has more than 1 N.E. mixed strategy

42. Saddam and UN
Part b) Saddam is hiding WMDs in location X, Y, or Z. UN can look in any two of these places. Think of UN’s strategy as “where not to look”. In N.E. probability of each strategy will be equal. (Why?) Also in N.E. Saddam’s strategy of hiding missiles in each place is the same. (Why?)

43. See you on Thursday…

44. Problem 9.
Each of 3 players is deciding between the pure strategies go and stop. The payoff to
go is 120/m , where m is the number of players that choose go, and the payoff to stop is 55 (which is received regardless of what the other players do). Find all Nash equilibria in mixed strategies.
Let’s find the “easy ones”.
Are there any symmetric pure strategy equilibria?
How about asymmetric pure strategy equilibria?
How about symmetric mixed strategy equilibrium?
Solve 40p^2+60*2p(1-p)+120(1-p)2=55
40p2-120p+65=0

45. What about equilibria where one guy is in for sure and other
two enter with identical mixed strategies?
For mixed strategy guys who both
Enter with probability p, expected payoff from entering is
(120/3)p+(120/2)(1-p). They are indifferent about entering or not if
40p+60(1-p)=55. This happens when p=1/4.
This will be an equilibrium if when the other two guys enter with
Probability ¼, the remaining guy is better off entering than not.
Payoff to guy who enters for sure is:
40*(1/16)+60*(3/8)+120*(9/16)=92.5>55.

46. Problem 7.7, Find mixed strategy Nash equilibria

47. A mixed strategy N.E. strategy does not give positive probability
To any strictly dominated strategy
c dominates a and y dominates z
Look at reduced game without these strategies

48. Problem 8, Chapter 7
A Nash equilibrium is any strategy pair in which the defense defends
against the outside run with probability .5 and the offense runs up the
middle with probability No matter what the defense does,
The offense gets the same payoff from wide left or wide right,
So any probabilities pwl and pwr such that pwl+pwr=.25
will be N.E. probabilities for the offense.

49. Expected Utility Theory of Choice Under Uncertainty
Suppose that you face random outcomes. You assign a “utility” to each possible outcome in such a way that your choices among uncertain prospects are those that maximize “expected utility”.

50. Expected utility Example: Utility of money
Suppose you have a lottery that will with probability 1/4 win 10 million dollars and with probability ¾ will be worthless. You get just one chance to sell your ticket.
Would you sell it for million dollars?
Yes No

51. Expected utility Example: Utility of money
Suppose you have a lottery that will with probability 1/4 win 10 million dollars and with probability ¾ will be worthless. You get just one chance to sell your ticket.
Would you sell it for 1 million dollars?
Yes No

52. Expected utility Example: Utility of money
Suppose you have a lottery that will with probability 1/4 win 100 million dollars and with probability ¾ will be worthless. You get just one chance to sell your ticket.
Would you sell it for 500 thousand dollars?
Yes No

53. Construct a utility scale
Let u(10 million)=1 Let u(0)=0.
Then ask question. How much money X for sure would be just as good as having a ¼ chance of winning 10 million and ¾ chance of 0?
Then assign u(X)=(3/4)u(0)+(1/4)u(10,000,000)=
(3/4)0+(1/4)1=1/4.

54. Assigning utility to any income
Lets choose a scale where u(0)=0 and u(10 million)=1.
Take any number X. Find a probability p(X) so that you would just be willing to pay $X for a lottery ticket that pays 10 million with probability p(X) and 0 with probability 1-p(x).
Assign utility p(X) to having $X.

55. Field Goal or Touchdown?
Field goal is worth 3 points.
Touchdown is worth 7 points.
Which is better? Sure field goal or probability ½
of touchdown?

56. Finding the coach’s von Neumann Morgenstern utilities
Set utility of touchdown u(T)=1
Set utility no score u(0)=0
The utility of a gamble in which you get a touchdown with probability p and no score with probability 1-p is pu(T)+(1-p)u(0).
What utility u(F) to assign to a sure field goal?
Let p* be the probability such that the coach is indifferent between scoring a touchdown with probability p* (with no score with prob 1-p*) and having a sure field goal.
Then u(F)=p*u(T)+(1-p*)u(0)=p*x1+(1-p*)x0=p*.