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Introduction to Game TheoryYale BraunsteinJune 2003General approachBrief History of Game Theory Payoff MatrixTypes of Games Basic StrategiesEvolutionary ConceptsLimitations and ProblemsBrief History of Game Theory1913 - E. Zermelo provides the first theorem of game theory; asserts that chess is strictly determined1928 - John von Neumann proves the minimax theorem 1944 - John von Neumann Oskar Morgenstern write Theory of Games and Economic Behavior”1950-1953 - John Nash describes Nash equilibriumRationalityAssumptions: humans are rational beingshumans always seek the best alternative in a set of possible choicesWhy assume rationality?narrow down the range of possibilitiespredictabilityUtility TheoryUtility Theory based on:rationalitymaximization of utilitymay not be a linear function of income or wealthIt is a quantification of a persons preferences with respect to certain objects.What is Game Theory? Game theory is a study of how to mathematically determine the best strategy for given conditions in order to optimize the outcomeGame TheoryFinding acceptable, if not optimal, strategies in conflict situations.Abstraction of real complex situationGame theory is highly mathematicalGame theory assumes all human interactions can be understood and navigated by presumptions.Why is game theory important?All intelligent beings make decisions all the time.AI needs to perform these tasks as a result.Helps us to analyze situations more rationally and formulate an acceptable alternative with respect to circumstance.Useful in modeling strategic decision-makingGames against opponentsGames against natureTypes of GamesSequential vs. Simultaneous movesSingle Play vs. Iterated Zero vs. non-zero sum Perfect vs. Imperfect information Cooperative vs. conflictZero-Sum GamesThe sum of the payoffs remains constant during the course of the game.Two sides in conflictBeing well informed always helps a playerNon-zero Sum GameThe sum of payoffs is not constant during the course of game play.Pla
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