# ch10 - Chapter 10: Games and Strategic Behavior Monday,...

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Chapter 10: Games and Strategic Behavior Monday, July 19

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WHAT IS A „GAME‟? basic elements of a game : the players , the strategies available to each player, and the payoffs each player receives for each possible combination of strategies
HOW TO READ A PAYOFF MATRIX player B B plays “left” B plays “right” player A A plays “up” 10 5 3 1 A plays “down” 3 4 12 2 If A plays up, and B plays left, then A gets 10, and B gets 5. By convention, the payoff for player on the left (in this case, A) is listed first in each cell.

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HOW TO READ A PAYOFF MATRIX B left right A up 10 5 3 1 down 3 4 12 2 If A plays up, and B plays left, then A gets 10, and B gets 5. If A plays up, and B plays right, then A gets 3, and B gets 1. If A plays down, and B plays left, then A gets 3, and B gets 4. If A plays down, and B plays right, then A gets 12, and B gets 2.
QUESTION 1 (reading a payoff matrix) B left right A up 7 3 5 2 down 9 6 10 8 If A plays down, and B plays left, then what is A‟s payoff? A) 6 B) 9 C) 7 D) 5 E) 10

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answer to question 1 B left right A up 7 3 5 2 down 9 6 10 8 If A plays down, and B plays left, then what is A‟s payoff? A) 6 B) 9 C) 7 D) 5 E) 10
QUESTION 2 (reading a payoff matrix) B left right A up 3 10 10 6 down 7 2 9 7 If A plays up, and B plays right, then what is B‟s payoff? A) 10 B) 2 C) 7 D) 6 E) 3

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answer to question 2 B left right A up 3 10 10 6 down 7 2 9 7 If A plays up, and B plays right, then what is B‟s payoff? A) 10 B) 2 C) 7 D) 6 E) 3
CHICKEN Biff swerve straight Alex swerve 6 6 5 8 straight 8 5 0 0 Alex and Biff drive towards each other. At the last second, they must each simultaneously decide whether to swerve, or to continue driving straight towards the other guy. The worst outcome for both players is if they both go straight. The best outcome for either player is if he‟s the only one who goes straight.

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ROCK PAPER SCISSORS Barney rock paper scissors Fred rock 0 0 -1 +1 +1 -1 paper +1 -1 0 0 -1 +1 scissors -1 +1 +1 -1 0 0 Fred and Barney are playing rock-paper-scissors for money. If Fred plays paper, and Barney plays rock, then paper covers rock, so Barney has to give \$1 to Fred.
DOMINANT STRATEGIES No matter what B does, A is better off if he plays down.

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## This note was uploaded on 08/03/2010 for the course ECON 1 taught by Professor Bergstrom during the Summer '07 term at UCSB.

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ch10 - Chapter 10: Games and Strategic Behavior Monday,...

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