Game Theory Models

Consider this model to illustrate game theory (imagine the units as units of utility; something you want - say dollars for instance):

Actors	B
A	Choice	1		2
	1	4	2	1	1
	2	2	1	0	0

For example, if actor A chooses choice 1 and actor B chooses 2, then actor A will get 1 and actor B will get 1.

Because of this, we see that actor B has what is known as a dominant strategy, B is best off choosing 1; A may be better with 1 or 2 depending on B. This is because if B chooses 1, he is guaranteed at least 1 unit and may get 2 units.

Now consider this:

Actors	B
A	Choice	1		2
	1	22	20	9	30
	2	20	17	18	25

Here we see that B certainly has a dominant strategy, choice 2; B will always be better off with a value in column 2 then in column 1. However, A does not have a dominant strategy, he may be better in one or in two depending on B. Still, A may assume that B will act "rationally" and choose 2 and therefore A may very well want to choose 1. This is an idea of game theory.