Normal form games are the foundation of game theory, representing strategic interactions between players . These games capture the essence of decision-making in competitive situations, where each player's choices affect everyone's outcomes.
In this representation, players, strategies , and payoffs are laid out in a matrix. This format allows for easy analysis of pure and mixed strategies, helping us understand how players might behave in simultaneous-move scenarios with strategic interdependence .
Game Components
Players, Strategies, and Payoffs
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Players are the decision-makers in the game who choose from a set of available actions
Strategies represent the complete plan of action for each player, specifying what action to take in every possible situation
Payoffs are the outcomes or utilities that each player receives based on the combination of strategies chosen by all players
Payoff matrix is a tabular representation of the game, showing the payoffs for each player for every possible combination of strategies
Representing Games with a Payoff Matrix
A payoff matrix summarizes the game by displaying the players, their strategies, and the corresponding payoffs in a table format
Each cell in the matrix represents a unique combination of strategies chosen by the players
The payoffs in each cell indicate the outcome for each player when that particular combination of strategies is played
Payoff matrices provide a clear and concise way to represent and analyze strategic interactions between players (Prisoner's Dilemma , Battle of the Sexes )
Strategy Types
Pure Strategies
A pure strategy is a complete plan of action that specifies a single action to be taken in every possible situation
In a pure strategy, the player chooses one specific action with certainty
Pure strategies do not involve randomization or probability distributions over actions
Examples of pure strategies include always cooperating or always defecting in the Prisoner's Dilemma game
Mixed Strategies
A mixed strategy is a probability distribution over the set of available pure strategies
In a mixed strategy, the player randomizes their choice of action according to a specified probability distribution
Mixed strategies allow players to introduce unpredictability into their decisions
Examples of mixed strategies include playing "Rock" with 50% probability and "Paper" with 50% probability in the Rock-Paper-Scissors game
Game Characteristics
Simultaneous Move Games
In simultaneous move games, players choose their strategies simultaneously without knowing the choices of other players
Players make their decisions independently and without observing the actions of their opponents
Simultaneous move games capture situations where players must anticipate and reason about the likely strategies of others
Examples of simultaneous move games include the Prisoner's Dilemma, Battle of the Sexes, and the Matching Pennies game
Strategic Interaction and Interdependence
Strategic interaction refers to the idea that a player's optimal strategy depends on their beliefs about the strategies of other players
In games with strategic interaction, the payoffs of each player are influenced by the combined actions of all players
Players must consider the incentives and likely behaviors of their opponents when making their own decisions
The concept of strategic interaction highlights the interdependence of players' choices and the need for strategic reasoning in game theory