An Introduction to Game

Theory
Presented as an undergraduate
class in
Multimedia Mathematics
Paul Trafford
paul.trafford@stx.oxon.org
6 July 2011

PART A: Basic Concepts

Lets Play a Game!

Description: Bank has up to 1,000 to give away
to the person or persons who choose the highest
number.
Players: Each individual student or group.
Objective: To win as much as possible.
Rules.
1. No communication between the players
2. Choose a number N >= 1 and write it down
on a piece of paper along with student/group name.
3. The student(s) who chooses max. value of N wins
total of 1,000/N
3

Lets Play the Game Again!

Description: Bank has up to 1,000 to give away
to the person or persons who choose the highest
number.
Players: Each individual student or group.
Objective: To win as much as possible.
Rules.
1. Communication allowed between the players
2. Choose a number N >= 1 and write it down
on a piece of paper along with student/group name.
3. The student(s) who chooses max. value of N wins
total of 1,000/N
4

What is Game Theory?

Definition of Game Theory
The analysis of competitive situations (or situations of
conflict) using mathematical models
Essential Terminology
The way a game is played depends on strategy a
plan of action before the game begins.
A solution is the adoption of a strategy that yields a
particular outcome.
Compare solving environmental problems with
solving an equation.
5

Characteristics of Game
Theory
What is it about?
Fundamentally about the study of decision-making
Investigations are concerned more with choices and
strategies than best solutions.
It seeks to answer the questions:
i. What strategies are there?
ii. What kinds of solutions are there?
Examples:
. Chess, Go, economic markets, politics, elections, family
relationships, etc.
6

History (1)
The study of games is many centuries old.
More systematic developments in Game Theory
took place in the first half of the 20th Century.
Main Founders
John Von Neumann (mathematician)
Oskar Morgenstern (economist)
Image sources: Los Alamos National Laboratory, http://
www.lanl.gov/history/atomicbomb/images/NeumannL.GIF
and American Mathematical Society, http://www.ams.org/samplings/feature-column/fcarc-rationality
7

History (2)
Main publication: von Neumann & Morgenstern:
Theory of Games and Economic Behaviour. Princeton
University Press, 1944.
Goal:
Application of mathematical methods to broadly
analyse games
A new scientific approach to the study of economics.
Applications:
Aided by computers, theory has been broadly
applied in large-scale operations such as
international trade.
8

Game Theory is inter-disciplinary

Game
Theory

Mathematic
s

Economic
s

What makes a Game?

Elements in a Game
One or more players participants, each may be an
individual, a group or organisation, a machine, and so on.
One or more moves (or choices) where a move is an
action carried out during the game, including chance
moves (when nature plays a hand) as in the toss of a
coin.
A set of outcomes where an outcome is the result of
the completion of one or more moves
[e.g. game of chess may end in checkmate or a draw]
Payof an amount received for a given outcome.
Finally, a set of rules which specify the conditions for the
players, moves, outcomes and payoffs.
10

Strategy
How should one play the game?
Definition: A strategy is a plan of action by which
a player has a decision rule to determine their set of
moves for every possible situation in a game.
A strategy is said to be pure if it at every stage in the
game it specifies a particular move with complete
certainty.
A strategy is said to be mixed if it applies some
randomisation to at least one of the moves.
For each game, there are typically multiple pure
strategies. Note that the randomisation is a set of fixed
probabilities, where the sum of the probabilities is 1.
11

Strategy: Travel Example

In this game a player is a commuter who is returning
home from work their objective is to return home as
soon as possible. They can choose between train, bus
and subway
The first choice is catch the train, the second choice is
catch the bus and so on.
A commuter who always chooses to catch the train is
following a pure strategy.
A commuter who sometimes picks the train and
sometimes the bus is following a mixed strategy.
Question: is this a one player game?
Photo credit: Nyao148 : Mejiro railway station http://en.wikipedia.org/wiki/File:Mejiro-Sta.JPG

12

Types of Games (1): Co-operative vs.

Non co-operative Games
Our first game (slide 2): non-cooperative
Our second game (slide 3): cooperative
Cooperation generally may lead to higher payoffs.
Further Examples:
Countries cooperate on trade (reduced tariffs) leading
to boost in exports
Two leading national social networking sites share
technical knowledge and keep out an overseas
competitor.
Cartel: formation of monopoly by multiple
organisations.
13

Types of Games (2): Perfect vs.

Imperfection Information
A game is said to have perfect Information if all the
moves of the game are known to the players when
they make their move. Otherwise, the game has
imperfect information.
A large class of games of imperfect information are
simultaneous games - games in which all players
make their moves at the same time without knowing
what the others will play. (The decisions may be
made beforehand, but are not communicated).
A game is said to be deterministic if there are no
chance moves. Otherwise, the game is nondeterministic.
14

A selection of games

Photo credits: Morten Johannes Ervik [Go], Jose Daniel Martinez [Chess], William Hartz
(Scrabble), David ten Have (Ludo), WikiJET (Janken), Cyron Ray Macey (Tic Tac Toe),
Dayland Shannon (Monopoly), Denise Griffin (Bridge), Steve Snodgrass (Draughts)
15

How to classify?
There are a number of [orthogonal]
criteria that may be used as the basis
for classifying games.
A common one uses two: im/perfect

information and
chance/not
chance.

Nondeterministic
(Chance
moves)

Deterministic
(No chance

Perfect
Information

Imperfect
Information

16

Classification of games:
Perfect Information

Imperfect Information

Chance
Moves

No
chance
moves

Photo credits: Morten Johannes Ervik [Go], Jose Daniel Martinez [Chess], William Hartz (Scrabble), David
ten Have (Ludo), WikiJET (Janken), Cyron Ray Macey (Tic Tac Toe), Dayland Shannon (Monopoly), Denise
Griffin (Bridge), Steve Snodgrass (Draughts)
17

Zero vs. Non-Zero-Sum Games

One of the most important classifications .
A game is said to be zero-sum if wealth is neither
created nor destroyed among the players.
A game is said to be non-zero-sum if wealth may
be created or destroyed among the players (i.e.
the total wealth can increase or decrease).
All examples above are zero-sum because they are
competitive leisure games. However, most reallife situations are non-zero-sum (as indicated, for
example, by how economies can grow).

18

PART B: Zero-Sum Games

and Extended Form

19

1- Person Game: Tomato

Plants (1)

There are many 1 person games including

popular card games called Patience. They
are instructive in decision-making.
Example: Growing tomato plants!

Photo credit: Manjith Kainickara http://www.fotopedia.com/items/flickr-1061718736

20

1- Person Game: Tomato

Plants (2)
Objective: Grow a healthy tomato plant!
Rules.
1. One must make at least one move plant
a seed.
2.Players
Afterwards,
one can Chance
makeMoves
any number of
Moves
moves:

Water plant
Add fertiliser
Communicate with plant
Place in sunlight
Shelter plant

It rains
It is stormy (heavy rain and
wind)
It is sunny
There is frost

Photo credit: Manjith Kainickara http://www.fotopedia.com/items/flickr-1061718736

21

1- Person Game: Tomato

Plants (3)
Outcomes

Payoffs

Plant doesnt grow

Plant grows, but has
no fruit
Plant grows, but has
sour fruit

Big ripe Tomatoes

Small ripe tomatoes
No tomatoes
etc.

How to Model?
Photo credit: Manjith Kainickara http://www.fotopedia.com/items/flickr-1061718736
22

2- Person Game: Simple Nim

(Also called the subtraction game)

Rules
Two players take turns removing objects from a
single heap or pile of objects.
On each turn, a player must remove exactly one or
two objects.
The winner is the one who takes the last object
Demonstration:
http://education.jlab.org/nim/index.html
23

Simplified Nim: winning strategy:

proof
Lemma: Suppose that Players A and B are playing the Nim
subtraction game where at each move a player can remove
between 1 and c counters, then a player has a winning
strategy if they can play a move that leaves k(c+1) counters.
Proof
We prove this for Player A
(1) Base Case (k=1):
Suppose A leaves c+1 counters, then B has to choose to
remove x:1xc.
This implies that there are y = c+1-x left, where 1 y c.
Then A chooses y and wins.

24

Simplified Nim: proof (2)

(2) Inductive step:
Assume the statement is true for k=n (n1).
I.e. if Player A leaves n(c+1) , then player A wins.
Suppose A leaves (n+1)(c+1) counters left, i.e. nc+n+c+1
If B chooses x:1xc, this leaves nc+n+c+1-x.
Then A chooses c+1-x, leaving n(c+1).
(3) Completion of proof by induction:
Thus if the case k=n is true, then so is the case k=n+1
We have the base case k=1, is true, so the statement is
true for k=2,3, and so on.
The Lemma is thus proved by induction for all values of k.

25

Simple Nim: Another go?

Rules
Two players take turns removing objects from a single
heap or pile of objects.
On each turn, a player must remove exactly one or two
objects.
The winner is the one who takes the last object
Strategy
Leave a multiple of 3.
Demonstration: http://education.jlab.org/nim/index.html
26

2- Person Game: Traditional Nim

(General form)
Rules
Two players take turns removing objects from distinct
heaps or piles of objects. On each turn, a player must
remove at least one object, and may remove any number
of objects provided they all come from the same heap.
Strategy:
To find out which move to make, let X be the Nim-sum of
all the heap sizes. Take the Nim-sum of each of the heap
sizes with X, and find a heap whose size decreases. The
winning strategy is to play in such a heap, reducing that
heap to the Nim-sum of its original size with X.
- Wikipedia entry 6/2011
27

Games in Extensive Form: Modelling

by Trees
We may model how the set of states in a game by using
a tree with nodes and edges called extensive form.
Gambit is a set of software tools for
doing computation on finite,
non-cooperative games.
It provides tree representations.
Project founded in the mid-1980s by Richard McKelvey
at the California Institute of Technology, USA.

[ Gambit Web site: http://www.gambit-project.org/

]

28

Gambit Example: Tree for Nim (2,2)

We may model how the set of states in a
game by using a tree with nodes and edges.
E.g. (2,2) game:

29

PART C: Zero-Sum Games in

Normal Form

30

Introducing 2 person games in

Normal Form
We represent the players by Player A and
Player B (or simply A and B) and denote the
moves they can make as A1, A2, , An and
B1, B2, , Bm respectively. These moves
are made simultaneously, so these are
games of imperfect information.
We represent the game in normal form,
i.e. using payof matrices, where the value
of each cell (i,j) is the payoff corresponding
to the moves Ai and Bj respectively.
31

Normal Form: example of 2*2 game

In the following example, we treat the special case where each
player has 2 moves.

B1

B2

A1

A2

-2

(Note the payoffs are the values that will be given to Player A)
Each row or column of payoffs is called an imputation.
Player A has two moves: A1 and A2.
Player B has two moves: B1 and B2.
The payoff for a game is given by the intersection. Thus if the
moves are respectively A1 and B2, then the payoff is zero.
32

Solutions of 2 person games

A solution is expressed as a set of strategies for all players that yields
a particular payoff, generally the optimal payoff for both players. This
payoff is called the value of the game.
Suppose, for example, each player adopts the strategy of choosing the
move whose imputation contains the cell with the maximum payoff.

B1

B2

A1

A2

-2

Here, player A picks A2 as it contains a 4, whereas player B selects B2

as it contains -2. This would yield 2 for player B.
However, this is not a solution as it is not optimal for player A they
could always do better by playing A1. So the value of the game is >-2.

33

The Concept of Equilibrium (Pure

Strategies) 1/2
So what strategies may yield optimal payoffs for
both?
Key concept: In an equilibrium, each player of the
game has adopted a strategy that cannot improve his
outcome, given the others' strategy. The method for
this is:
Player A considers each imputation and what is the
least payoff value that may be gained by choosing
that imputation.
Similarly, Player B considers each imputation and
what is the greatest payoff value that may be
gained by choosing that imputation.
34

The Concept of Equilibrium (Pure

Strategies) 2/2
Formally,
this is the maximin criteria given by

(where denotes payoff in cell (i,j)).

Example
So, player A can expect
to gain at least vL =2
Player B can expect
to lose at most vM =3.

B1

B2

vL

4
2

A2

1
3

2*

vM

3*

A1

35

The Concept of Equilibrium (Pure

Strategies): Saddle Points
In the case that the value of the
game is vL = vM , a saddle point
is any cell whose payoff is this
value.
Example

Playing A1 => payoff of at least 0

Playing B2 => payoff of no more than
0
There is a unique saddle point cell
(A1,B2).
If either player deviates from this, then
they will do worse.
Here, vL = vM = 0.

B1

B2

vL

A1

0*

A2

-2

-2

vM

0*

36

When there is no Saddle

Point
Consider again the following payoff matrix:
B1 B2
A 1
4
1
A 3
2
We have seen above that 2
the value of the game lies between 2 and
3.
But, if player A always plays A2, then B can always play B2 and the
payoff is 2, whereas is player A always plays A1, then B1 can always
play B1, yielding 1, which is less than 2!
Can player A gain more than 2?
Yes, because the game is of imperfect information players dont
know each others move, but this means that we should not be
predictable.
37

Simplification using
Dominance
For larger matrices, we may often simplify.

B1 B2 B3 B4 B5
A 4
5
6
1
5
1
A for4simplification
3
5
3is to4 compare pairs of
The main technique
columns, C and C, 2
say, and delete those columns where the
payoff in C is always greater than that in C or vice versa. In this
case we say C dominates C. (Similarly for rows).

Thus, B4 dominates B1, B3 and B5, yielding :

This matrix yields a saddle point
A1
corresponding to the moves A2 and B4,
A2
with value of the game=3.

B2

B4

3*
38

Simplification using Dominance:

Demonstration in Gambit

39

Mixed Strategies:
Expectation 1/2
Scenario: Game is played repeatedly. In this case choosing
the same pure strategy is not always optimal, so we can
vary these pure strategies.
To determine how we vary the strategies, we can apply
probability theory.
Key concept is Expectation := the product of the
probability of the occurrence of an event and the value
associated with the occurrence of a given event.
A player can use a mixed strategy this is more than one
pure strategy, where each pure strategy is played
randomly according to a fixed probability yielding an
expected payoff.
40

Mixed Strategies:
Expectation 1/2
We
then can determine the expected value of a
game.
Formally, as before, we denote the moves available
to Players A and B as A1,A2, ,An and B1,B2, ,Bm
respectively. Suppose the moves in As mixed
strategy are played with probabilities x = (x1, x2, ,
xn); and for B, y = (y1, y2, , ym). Suppose the
payoffs are given by .
Then the games expected value for A is E(x), where
The expectation is the same for Player B.
41

Mixed Strategies: Expectation:

Examples

B1 B2
A 1
4
1
3
2A are A 1,A2 and to
The moves available toA Player
2 the moves in As mixed
Player B: B ,B . Suppose
1

strategy are played with probabilities x = (x1, x2); and

for B, y = (y1, y2). Suppose the payoffs are given by .
Then the games expected value, E(x)=x1y1*1 + x1y2*4
+ x2y1 *3 + x2y2*2
So what should the values be for x and y ?

42

Minimax: The Concept of Equilibrium

for Mixed Strategies
Minimax
one of the key theories developed by Von Neumann and

Morgenstern originally defined this only for zero-sum games

Rationale: whatever the other player does, this return is assured on

average.
Theorem. In a two-person zero-sum game where player A has n
strategies and player B has m strategies (where n and m are finite), then
the minimax value of the game, v, is given by:
v=
(The saddle point is a special case where xi = 1 for some i, yj=1 for some
j.)
Thus the solution is to play moves in fixed proportion x and the value can
be determined by simply considering the expectation against any single
move.
43

Minimax: Determination of the

Mixed Strategies
Determination of x and y
Determine if there are any saddle points. If
found then we have the solution and can
stop here.
Remove all dominated imputations
(rows/columns), leaving a payoff matrix M.
For the two players, solve Mx = v and MTy
= v respectively, where v is a vector where
each entry is v, the value of the game. (MT
is the transpose of M)
44

Minimax Example (1/4)

B1

B2

A1

A2

There are no saddle points, and no cases

of dominance.
Player B:

Player A:
45

Minimax Example (2/4): Player As

mixed strategy
Let x:= the probability Player A plays A1 B1
A1
1
Let y:= the probability Player A plays A1
A2
3
Then x+y=1.

B2
4
2

(1)1*x + 3*y = v
(2)4*x + 2*y = v

Therefore, from (1), x=v-3y. Substitute in (2) to

give:
4(v-3y)+2y=v. Therefore, 3v=10y.
Hence, 3x = 3(v-3y) = 10y-9y = y.
Therefore x=0.25, y=0.75 and v=2.5
46

Minimax: Example (3/4): Player Bs

mixed strategy
Hence, for player B:

B1

Let x:= the probability Player B plays A

B1 1
1
Let y:= the probability Player B plays A
B1 3
Then x+y = 1.
2

B2
4
2

(1) 1*x + 4* y = 2.5

(2) 3*x + 2* y = 2.5

Therefore, 3(2.5-4y)+2y = 2.5

Hence, 5 = 10y => y = 0.5. Therefore x =
0.5
47

Minimax Example (4/4) use of

Gambit
Gambit provides modelling of games in normal form Gambit
calls them strategic games.

In the screenshot, each cell has a pair of payoffs - the first is

what Player A receives, the second is what Player B receives.
(Gambit is designed for non-zero-sum games see later
sections).
It can compute the expected value and the corresponding
equilibria mixed strategies of the two players.

48

Minimax Limitations
Whilst the Minimax theorem provides a solution, its
macro-oriented, i.e. not sensitive to individual variations.
Thus
It ensures an average payoff
Assumes repeated play and is a result that is more
reliable the more times played
In practice, it takes no account of the strategy of the
opponent even if they keep playing the same pure
strategy, the expected return is no more, no less
The optimisation reflects a collective philosophy that
markets find their natural level.
49

PART D: Non-Zero-Sum
Games

50

An Overview of Non-Zero-Sum
Games
[Recap] A game is said to be non-zero-sum if wealth may
be created or destroyed among the players (i.e. the total
wealth can increase or decrease).
In general, unlike for zero-sum games, in non-zero-sum
games, wealth can be mutually created through
cooperation.
Cooperation may be achieved whether or not there is
direct communication.
Where there is no communication, information is
necessarily imperfect.
Where there is communication, there may be bargaining.
51

Analysis of Non-Zero-Sum
Games
Methods of mathematical logical, such as use of induction, are
effective for determining strategies in Zero-sum games with
perfect information. However they are less so for games of
imperfect information, and are often not applicable to non-zero
games.
IF some assumptions are made THEN some mathematical
techniques may be effectively applied.
Prerequisites:
Understand the environment,
understand the individual and collective psychology
(Thus we are moving from the domain of pure mathematics to
embrace social sciences, particularly psychology and economics.)

52

Utility
Payoffs are given as utility the perceived worth of
something
Utility is a key concept and is determined by social
and psychological factors.
They depend upon personal preferences
The same material payoff may have different utility
(In economics, personal preference is often reckoned
in terms of ranking a selection of consumer offerings.
[Economic] agents are said to be rational if this
ranking system is complete.)
53

Utility Example (Exercise)

Which would you choose?
(Game is only played once!)
1.10 million Yen
2.100 million Yen

100% chance
20% chance

54

Utility Example (Analysis)

Expected return option (1) = 10 million yen,
Expected return option (2) = 20 million yen,
But option (1) has already great utility utility curve may be
logarithmic
Here, if you have many friends playing or many attempts,
then you should go for option 2.
This is similar to philosophy of penny shares small
investment, unlikely to succeed, but if it succeeds then it
could be very successful.
55

Analytical Approaches to Non-ZeroSum Games

As before, the mathematical approaches use linear
algebra, matrices, and probability theory.
Hence the basic Concepts in Non-Zero-Sum Games:
One-off vs Repeated games
Payoff matrix
Expectation
Strategies pure and mixed
However, the generation of appropriate models requires
Social Science tools that take account of the psychology of
human behaviour, individual and collective; the analysis of
markets, negotiation and bargaining.
56

Introducing The Prisoners Dilemma

Description: Two men suspected of committing a bank robbery together
and are arrested by the police. They are placed in separate cells, so
cannot communicate.

Each suspect may either confess or remain silent. They

know the consequences of their actions. Suppose we call
them Player A and Player B:
If A confesses, but B remains silent, then A turns Queens
Evidence [UK] and goes free, whilst the other goes to
prison for 10 years
If both A and B confess, then they go to prison for 5 years.
If both A and B remain silent, then they go to prison for 1
year for carrying concealed weapons.
57

The Prisoners Dilemma: Payoff

Matrix
Non-zero-sum games of normal form may be represented
by a payoff matrix, where each cell is an n-tuple, a set of
payoffs, 1 for each player. Thus for the Prisoners
Dilemma, a 2-person game, we have pairs of payoffs.
If A1 denotes Player A remains silent, A2 denotes
Player A confesses (similarly for B), then we can
represent the problem by the following matrix:

B1

B2

A1 (-1,-1)

(-10,0)

A2 (0,-10)

(-5,-5)

58

The Prisoners Dilemma:

Strategy
Player A reasons as follows:
If Player B chooses B1, then I am better off choosing A2 (because O
> -1).
If Player B chooses B2, then I am better off choosing A2 (because -5
> -10).
Similarly, for player B. Hence A2,B2 are selected.
In fact, this reflects accepted theory: John Nash extended the
minimax result of zero-sum games to non-zero-sum games.
Informally, it states that a pair of mixed strategies is in Nash
equilibrium, if it means that any unilateral (one-sided) deviation for
either player would yield a payoff that was no more than the value of
the pair.
(A2,B2) are in equilibrium. Payoffs are (-5.-5)
59

Mixed Strategies for Non-zero-sum

Games: Nash Equilibrium
As mentioned above, John Nashs theorem states that a pair of
mixed strategies is in equilibrium if any unilateral (one-sided)
deviation for either player would yield a payoff that was no more
than the value of the pair.
Formally,
Definition. A pair of strategies, x*X, y*Y is an equilibrium
pair for a non-zero-sum game if for any xX and yY, eA(x,y*)
e(x*,y*) and eB(x*,y) e(x*,y*) , where eA is player As payoff and
eB is player Bs payoff.
Theorem. Any two-person (zero-sum or non-zero-sum) with a finite
number of pure strategies has at least one equilibrium pair.
(Such a pair is called a Nash Equilibrium pair. Determining the
solution is not trivial.)
60

The Prisoners Dilemma:

Paradox
Paradox: both players confess and spend 5 years
in prison, whereas if they had remained silent
they would have spent 1 year each in prison!
Diagnosis: the unilateral view is not optimal. A
bilateral (two-sided) view involving cooperation
would suggest the other move for both players.
This is covered by the notion of strategies being
pareto optimal when there is no other
strategy in which both players are at least as
well off.
61

The Repeated Prisoners Dilemma:

Web demos
There are many online versions of the
Prisoners Dilemma.
See e.g.
Lessons from the Prisoners Dilemma:
An interactive tutorial by Martin
Poulter, April 2003, Economics Network
http://www.economicsnetwork.ac.uk/archive/pou
lter/pd.htm
62

The Prisoners Dilemma:

Applications (1)
What is it useful for?
Usefulness usually determined by consideration of
repeated games
Lessons for military (consider safety of the citizens of
two rival powers: which is safer? If they both disarm
(cooperative strategy)? Or if they are both heavily
armed?
Marketing strategies if two rival companies both offer
small discounts then they may receive many
customers and retain a good market share. What if
they offer huge discounts?
63

The Prisoners Dilemma:

Applications (2)
In economics as in other realms of the prisoner's dilemma,
success requires a willingness not to measure oneself
against any one opponent. ''You do tend to compare yourself
to other people,'' Dr. Hauser said. ''However, it turns out that if I
do that I'm hurting myself very badly.'' Biological Applications
In real life, that is, does cooperation depend on an internal
sense of morality? Or does it depend on the complicated
dynamics of environments where people challenge each other,
betray each other and trust each other over and over again?
NY Times, PRISONER'S DILEMMA HAS UNEXPECTED
APPLICATIONS By JAMES GLEICK Published: June 17, 1986

64

The Battle of the Sexes

Suppose that a newlywed couple are
both planning an outing at the
weekend. They havent yet decided
what to do.
The husband would like to watch
football, whereas the wife would like
to go to a concert, but they would
both prefer to be in the company of
their spouses rather than go their
separate ways.
Suppose option 1 is football and
option 2 is concert. Then the payoff
matrix may look like this:

W1 W2
H1 (4,1) (0,0
)
H2 (0,0) (1,4
)

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The Battle of the Sexes: Equilibria

(Gambit)
Gambit can calculate the equilibria and
gives 3 of them:

Two of the three are indicating cooperation

66

The Battle of the Sexes: Modelling in

Maxima
Maxima can be used to plot regions.
Suppose the husband chooses to play option H1 with probability x.
Therefore they play option H2 with probability 1-x.
Similarly, the wife plays option W1 with probability y and option W2
with probability 1-y.
We then can define expectation for each player as functions E1 and
E2 respectively in variables x and y:
E1:=(4*xy + 0*x(1-y)) + (0*(1-x)y + 1*(1-x)(1-y))
E2:=(1*xy + 0*x(1-y)) + (0*(1-x)y + 4*(1-x)(1-y))

Hence
E1=5xy x-y+1 and E2= 5xy+-4x-4y+xy
67

The Battle of the Sexes:

Cooperation: Maxima Graphs 1/2
We can carry out a parametric plot that shows
the expectations along the x-axis and y-axis
respectively. Thus this is actually a 2D plot in two
parameters(x,y). However, Maxima only allows one
parameter for 2D plots. Thus we need to use a 3D
plot, and simply set z to be a constant
E1(x,y):=5xy-4y-4x+4
E2(x,y):=5xy-x-y+1

- think of this as the x-axis

- think of this as the y-axis

Z:=0 any value will be fine

0<=x<=1, 0<=y<=1
68

The Battle of the Sexes:

Cooperation: Maxima Graphs 2/2
The resulting graph looks like:

69

The Battle of the Sexes: Cooperation:

Maxima Graphs: convex closure 1/2
Here, complete cooperation means that always
the payoffs are either (1,4) or (4,1). There may
be some decision rule that randomises this, e.g. a
toss of a coin. In this case, we simply denote the
probability of the first option by x (0 <= x <=1):
E1:= 4x + 1-x = 1+3x
E2:= x + 4(1-x) = 4-3x

We can plot this on the same graph and

compare
70

The Battle of the Sexes: Cooperation:

Maxima Graphs: convex closure 2/2
The result is simply a straight line joining the points (1,4)
and (4,1).

The expected values lie between 1 and 4 for both players.

It pays to cooperate!
71

Conclusions
Games occur in many life situations
Mathematical analysis requires
understanding of the context and
rules
Games played repeatedly yield
different responses from games
played only once.
Human psychology often yields
unexpected behaviour.
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