1. A tool for modeling strategic interactions
Game Theory
A tool for modeling strategic interactions

2. Parts to a Game A set of players
A set of actions available to each player
A payoff function that specifies how actions are mapped into payoffs for each player

3. A Penalty Kick in Soccer
Players = (Kicker, Goalie)
Actions for Kicker - (Kick Left, Kick Right) for Goalie – (Defend Kick Left, Defend Kick Right)

4. A Penalty Kick in Soccer
Payoffs – Kicker wins if Goalie guesses wrong and looses if Goalie guesses correctly. Goalie payoff is the opposite.

5. Normal Form Game
A table that graphically represents all of the parts to a game.

6. Normal Form Game Kicker Goalie Kick Left Kick Right Defend Kick Left
A table that graphically represents all of the parts to a game.
Players
Kicker
Goalie
Kick Left
Kick Right
Defend Kick Left
W,L
L,W
Defend Kick Right

7. Normal Form Game Kicker Goalie Kick Left Kick Right Defend Kick Left
A table that graphically represents all of the parts to a game.
Actions
Kicker
Goalie
Kick Left
Kick Right
Defend Kick Left
W,L
L,W
Defend Kick Right

8. Normal Form Game Kicker Goalie Kick Left Kick Right Defend Kick Left
A table that graphically represents all of the parts to a game. Payoffs (row player’s payoff listed first)
Kicker
Goalie
Kick Left
Kick Right
Defend Kick Left
W,L
L,W
Defend Kick Right

9. Today’s Experiment Get into 10 groups of people (3-4 per group).
Communication between groups is not allowed.
Your points are based upon the number of points that your group earns. Your points are the sum of your payoffs from the games. For each game you will be playing against another randomly selected group from the class.

10. Game of Chicken
Other
You
Chicken
Tough
4,4
2,10
10,2
0,0

11. Network Effects – Walkie Talkie
Other
You
Don’t Buy
Buy
4,4
4,0
0,4
8,8

12. Game of Trade
Other
You
Trade
No Trade
6,6
0,10
10,0
4,4

13. Driving Game
Other
You
Left Side
Right Side
10,10
0,0

14. Cartel Game – Output Level
Other
You
Low
High
8,8
5,10
10,5
6,6

15. Location Game
Other
You
Little Rock
Fayetteville
2,2
10,5
5,10
1,1

16. Rock Paper Scissors
Other
You
Rock
Paper
Scissors
5,5
0,10
10,0