1、,Game Theory,In Daily Life,Lei Wang Yuxi Weng Xueying Liu,Game theory :,Game theory is the study of strategic decision making. Specifically, it is “the study of mathematical models of conflict and cooperation between intelligent rational decision-makers.,4,Examle 1,Well use the most famous of all ga
2、mes: the Prisoners Dilemma. Suppose that the police have arrested two people whom they know have committed an robbery together. Unfortunately, they lack enough evidence to get a jury to convict. However, They have enough evidence to send each prisoner away for two years for theft of the getaway car.
3、 The chief inspector now makes the following offer to each prisoner: If you confess to the robbery, and he doesnt confess, then youll go free and hell get ten years in prison. If you both confess, youll each get 5 years in prison. If neither of you confess, then youll each get 2 years for the car th
4、eft.,5,Examle 1,6,Examle 1,Wherever one action for a player is superior to her other actions for each possible action by the opponent, we say that the first action strictly dominates the second one.,7,Examle 1,In the Prisoners Dilemma, then, confessing strictly dominates refusing for both players. T
5、hus the best conclusion is both players will confess, and both will go to prison for 5 years.,Competition Motel in Telecommunications,9,Example 2,A(China Telecom) is established enterprises, its power is abundant, occupies the overwhelming majority of the market share. B(China Unicom) has just set u
6、p soon, and they are not as powerful as China Unicom, which is set up by government to break monopoly and encourage competition.,10,Example 2,Summery:,Now, Game Theory has become one of the basic analysis tools in economics. It applies to a wide range of behavioral relations and has developed into an umbrella term for the logical side of decision science, including biology, economics, international relations, computer science, political science and so many other subjects.,THANK YOU,
