Game Theory - Different Types of Games

Simultaneous Games

• When players effectively make decisions at the same time
• They don’t know the choices of other players when making their choices

Examples:

1. The Prisoners’ Dilemma
2. A game of Rock, Paper, Scissors
3. Split or Steal in Golden Balls
4. Individual plays in a game of American Football
5. Penalty shoot-outs in soccer matches
6. Serving and receiving in Tennis
7. Speed dating
8. Closed bid auctions
9. Athletes choosing to dope or not to dope

One-Shot Games

• This is a game that is played only once
• The pay-off may be such that a game might be impossible to play twice
• E.g. mutually assured nuclear destruction
• Slightly different with tactical / conventional warfare
• In one-shot interaction, people often have an incentive to behave opportunistically / selfishly
• Consider a one shot Prisoners’ Dilemma game where an individual wants to minimise their own sentence

Repeated Games

Repeated games – a game played more than once

A very common feature of applied business – e.g. decisions on:

1. Pricing (Established supermarkets versus the Deep Discounters)
2. The size of marketing budgets (Coca Cola v Pepsi)
3. Research and development spend (Samsung v Apple v Huawei)
4. Capital investment and supply capacity forecasts (Cruise ships)

• With repeated games there is more scope for co-operative strategies to emerge
• Credible threat power – history of past behaviours
• Agents “learn by doing” – if someone continually serves to your backhand in tennis, your backhand will improve

Repeated games – a crucial point is the reaction to a defective strategy by another player

• Tit for Tat Strategy – if you defect, I defect in the next round
• Grim Strategy – if you defect, I will defect in all future rounds

Full revision presentation on Game Theory...