Game Theory Intro
Game Theory Course:
Jackson, LeytonBrown & Shoham
Game Theory Course: Jackson, LeytonBrown & Shoham
Game Theory Intro
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TCP Backoff Game
Game Theory Course: Jackson, LeytonBrown & Shoham
Game Theory Intro
.
.
TCP Backoff Game
Should you send your packets using correctlyimplemented TCP (which has a “backoff” mechanism) or using a defective
implementation (which doesn’t)?
Game Theory Course: Jackson, LeytonBrown & Shoham
Game Theory Intro
.
.
TCP Backoff Game
Should you send your packets using correctlyimplemented TCP (which has a “backoff” mechanism) or using a defective
implementation (which doesn’t)?
• This problem is an example of what we call a twoplayer game: • both use a correct implementation: both get 1 ms delay
• one correct, one defective: 4 ms for correct, 0 ms for defective • both defective: both get a 3 ms delay.
Game Theory Course: Jackson, LeytonBrown & Shoham
Game Theory Intro
.
.
TCP Backoff Game
• This problem is an example of what we call a twoplayer game: • both use a correct implementation: both get 1 ms delay
• one correct, one defective: 4 ms for correct, 0 ms for defective • both defective: both get a 3 ms delay.
• Play this game: in your head; with a friend; on our online system. • Some questions to discuss after playing:
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What action should a player of the game take?
Would all users behave the same in this scenario?
What global behavior patterns should a system designer expect? For what changes to the numbers would behavior be the same?
What effect would communication have?
Repetitions? (finite? infinite?)
Does it matter if I believe that my opponent is rational?
Game Theory Course: Jackson, LeytonBrown & Shoham
...Beauty Contest Experiment
The experiment executed in the seminar was very simple. Players had to choose a number between 0 and 100. The objective is to choose a number based on your guess of the mean guesses of the group and multiply it by 2/3. It is called the Beauty contest Experiment because it was based on a theory John Maynard Keynes proposed on the relationship of the stock market with beauty contests conducted in newspapers of his time. In this report I will examine the logic behind choosing the best response strategy in theory and compare it with the actual results of the experiment conducted. From the comparison I will provide justification for why the theory is different from reality by also comparing it to examples in real life.
To understand the underlying logic of the game’s strategy one must understand the Nash Equilibrium. Princeton University’s Website (an excellent source since John Nash the person who came up with the Equilibrium attended that university) defines Nash Equilibrium as “a solution concept of a game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his or her own strategy unilaterally. If each player has chosen a strategy and no player can benefit by changing his or her strategy while the other players keep theirs unchanged, then the current set of strategy choices...
... 2012 
 Application Of GameTheory to Business: Preliminary Findings for Term paper
Saurabh Mandhanya 11p164Rajat Barve 11p157Shashank Gupta 11p166Deepak Bansal 11P133Padmini Narayan 11p152Lizanne Marie Raphael 11P025 
[ The Kargil War: Analysis and Learning Through GameTheory ] 

Introduction
India and Pakistan have been involved in conflict over Kashmir since Independence. It has led to numerous wars and attacks. The relations and wars over Kashmir can be studied using GameTheory. Tit for Tat policy has been practiced by both nations. The pay of for wars for both countries has been changing depending on the context. This context has been based on many parameters –
1. Ally countries – US and China are widely regarded as Pakistan allies. China has been against India due to border issues. USSR has been traditionally supporting India until recently. The situation keeps on changing with changing stance of allies.
2. International support  International communities like UN tries to solve the conflict through negotiations.
3. Military strength – It keeps on changing depending upon development and purchase of weapons on both sides.
4. Resources including financial and others – India has always been in a relatively better position due to more available resources.
5. Leadership of both countries especially of Pakistan (Army Rule) – Army Rulers might...
...Topic 5: GameTheory Applied to the Movie and Aviation Industries
I. Case study: GameTheory Applied to the Movie Business
In the movie business, one of the trickiest decisions producers face is what type of movie to make. Suppose there are 2 movie studios and that their producers are trying to decide whether to make an Action Adventure (AA) or Romantic Comedy (RC) movie. Suppose each of the studios does not know what type of movie the competing studio is planning to make that same year and that they do not trust each other in the least. They face the following payoff matrix.
Studio 1
RC AA
Studio 2 RC (50,50) (90,60)
AA (60,90) (75,75)
(Figures show total estimated box office revenues in $ millions for Studio 1, Studio 2.)
What strategy (make an AA or RC movie) should each of the studios chose?
What is the payoff to each of the 2 studios given the strategies they choose?
Answer:
From Studio 1’s perspective:
Studio 1’s payoff
RC 50
RC
AA 90
Firm 2
RC 60
AA
AA 75
Same result from Studio 2’s perspective.
From studio 1’ s perspective: if studio 2 makes a RC, studio 1’s payoff is $50 million if it also makes a RC and $90 million if it makes an AA. If studio 2 makes an AA movie, studio 1’s payoff is $60 million if it makes a RC and...
...GameTheory
The game begins with a case that occurred on two prisoners. Both prisoners were suspected criminals and their work. Both prisoners were placed in a different room, then to be given the question of whether it is true they are committing a crime or not. Option given is: If the prisoner A prisoner confessed while B does not confess, then A will be free, while B will get a 6 month sentence. If they plead not guilty, then it will get a 1 month prison sentence. And if both confess, they will each get a 3 month prison sentence.
Zerosum game
In gametheory and economic theory, a zero–sum game is a mathematical representation of a situation in which a participant's gain (or loss) of utility is exactly balanced by the losses (or gains) of the utility of the other participant(s). If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero.
Prisoners dilemma game is an archeptypal example of of a nonzero sum game.The distinction between a zero sum game and a nonzero sum game is crucial.In zero sum game,with two players for simplicity,the utilities of players always sum to zero wathever the game’s outcome.On certain simplifying assumption,a zero sum game is equivalent to a zero money sum game.In this circumstances,zero sum...
...Gametheory is defined as “the study of the ways in which strategic interactions among economic agents produce outcomeswith respect to thepreferences of those agents, where the outcomes in question might have been intended by none of the agents” by the Stanford Encyclopedia of Philosophy (Ross 1997). The disciplines most involved in gametheory “are mathematics, economics and the other social and behavioral sciences” (McCain 1997).Gametheory was created to confront the problem and provide a theory of economic and strategic behavior. In gametheory, "games" have always been a metaphor for more serious interactions in human society. But gametheory addresses the serious interactions using the metaphor of a game: in these serious interactions, as in games, the individual's choice is essentially a choice of a strategy, and the outcome of the interaction depends on the strategies chosen by each of the participants (McCain1997).
John von Neumann a great mathematician founded gametheory. The legend of John Von Neumann gives a good insight on who John Von Neumann was and his theory. John von Neumann was a child prodigy, born into a banking family in Budapest, Hungary, “when he was only six years old he could divide eightdigit numbers in his...
...no matter what the other person does this is always better? Will such meek be able to survive when they give an open chance to exploiters to keep defecting and gaining? Will the meek inherit the earth?
The world has been preaching moral philosophy and few have been really practicing them. Many quote versus from the Bible and other religious books like above. Some believe that the world is still going on because of some good left in it and others think it is because people have learnt to punish the defectors. Let us study these philosophies in comparison with Prisoners Dilemma & TitForTat strategy in Gametheory.
Game theorists, like gamblers and children, can become addicted to iterated games. Their classic example is the Prisoner’s Dilemma, whose diabolical simplicity has given rise to thousands of scientific publications. Two players are engaged in the game. They have to choose between two options, which we term Cooperate or Defect. If both cooperate, they can earn three points apiece as reward. If both defect, they get only one point each, which is the punishment for failing to join forces. If one player defects while the other cooperates, then the defector receives five points (this is the temptation) while the trusting cooperator receives no points at all (this is the sucker’s payoff).
How will the rational player act? By defecting, of course. This is the right choice, no matter what...
...Assignment 2: Planning and Playing a Game
Objectives:
• Learn how individuals contribute to teamwork
• Experience some of the features of group work and teamwork
• Understand what managers and organizational developers do to transform
• groups into teams
• Articulate the tangible benefits (both quantitative and qualitative) of
• highperforming teams
• Finish with an interest in learning more about these concepts and
• techniques to apply what you learn
Background: For this assignment, you will plan and play a game with your family or friends, or at work based on the idea of the classic prisoner's dilemma. If you have had a class on gametheory, you will be well aware of this concept. It forms the basis of many TV game shows. The prisoner's dilemma was illustrated in Truman Capote's book, "In Cold Blood" concerning the 1959 robbery of a Kansas farmhouse by Perry Smith and Dick Hickock, who murdered their victims in order to eliminate the witnesses. After the men were captured, the police interrogated them separately. To get a confession, the police offered the men a reduced sentence for cooperating. Failure to cooperate would result in a death penalty charge for both.
In the prisoner's dilemma, if both parties cooperate they are mildly punished; if one betrays another, one is severely punished while the other goes free; and if both betray...
...GAMESTHEORY
In gametheory, Nash equilibrium (named after John Forbes Nash, who proposed it) is a solution concept of a game involving two or more players, in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his own strategy unilaterally. If each player has chosen a strategy and no player can benefit by changing his or her strategy while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitute Nash equilibrium.
Stated simply, Amy and Phil are in Nash equilibrium if Amy is making the best decision she can, taking into account Phil's decision, and Phil is making the best decision he can, taking into account Amy's decision. Likewise, a group of players is in Nash equilibrium if each one is making the best decision that he or she can, taking into account the decisions of the others. However, Nash equilibrium does not necessarily mean the best payoff for all the players involved; in many cases, all the players might improve their payoffs if they could somehow agree on strategies different from the Nash equilibrium: e.g., competing businesses forming a cartel in order to increase their profits.
The prisoner's dilemma is a fundamental problem in gametheory that demonstrates why two people might not cooperate even if it...