Game Theory
In Daily Life
Lei Wang
Yuxi Weng
Xueying Liu
Game theory :
Game theory is the study of
strategic decision making.
Specifically, it is "the study of
mathematical models of
conflict and cooperation
between intelligent rational
decision-makers.
Examle 1
We'll use the most famous of all games: the Prisoner's
Dilemma. Suppose that the police have arrested two
people whom they know have committed an robbery
together. Unfortunately, they lack enough evidence to
get a jury to convict. However, They have enough
evidence to send each prisoner away for two years
for theft of the getaway car. The chief inspector now
makes the following offer to each prisoner: If you
confess to the robbery, and he doesn’t confess, then
you'll go free and he'll get ten years in prison. If you
both confess, you'll each get 5 years in prison. If
neither of you confess, then you'll each get 2 years for
the car theft.
4
Examle 1
5
Examle 1
Wherever one action for a player is
superior to her other actions for each
possible action by the opponent, we say
that the first action strictly dominates the
second one.
6
Examle 1
In the Prisoner’s Dilemma, then,
confessing strictly dominates refusing
for both players. Thus the best
conclusion is both players will confess,
and both will go to prison for 5 years.
7
Competition Motel in
Telecommunications
Example 2
A(China Telecom) is established
enterprises, its power is abundant,
occupies the overwhelming majority
of the market share.
B(China Unicom) has just set up soon,
and they are not as powerful as
China Unicom, which is set up by
government to break monopoly and
encourage competition.
9
Example 2
Profit in
A’s profit B’s profit
all
A↓B --
+15
-5
+10
A -- B--
+5
+10
+15
A --B↓
-10
+15
+5
A↓B↓
-5
-5
-10
10
Summery:
Now, Game Theory has become one of
the basic analysis tools in economics. It
applies to a wide range of behavioral
relations and has developed into an
umbrella term for the logical side of
decision science, including biology,
economics, international relations,
computer science, political science and
so many other subjects.
THANK YOU