How To Read Payoff Matrix

Payoff of a game is incremental gain benefit or loss cost that accrue to a player by executing its strategy given the strategy of the other player.

How to read payoff matrix.

Outline its three basic parts. How to read a payoff matrix. A decision rule converts this row of payoffs into a single number that somehow represents the whole row. Once this is done it is easy to pick the alternative action whose representative number is better than the other alternative actions representative numbers.

We know that this payoff matrix will be 9 cells and will be a 3x3 matrix because each player has three choices. There are 2 firms a and b and they want to decide whether to start a new campaign. The process of learning various aspects of the payoff matrix could prepare you to. It is common practice to show the row player s payoff first and the column player s payoff second.

A payoff matrix can be used to calculate the aggregate outcome and to predict a strategy. The payoff matrix in the present case is shown in table 9. Of course the outcome of the game depends on the way the payoff matrix is structured. Remember that it is possible to have a payoff matrix with no nash equilibrium.

In game theory a payoff matrix is a table in which strategies of one player are listed in rows and those of the other player in columns and the cells show payoffs to each player such that the payoff of the row player is listed first. Game theory eg payoff matrix for a new technology game firm b. But because the prisoners cannot communicate each is likely to make a strategic choice that results in a more costly outcome. Start a new campaign.

The best option for both of them is to remain silent. As shown in table 9 the two individuals have two options either to confess or remain silent. Since both players have 3 options we know that their are nine possible outcomes. Payoff tables a profit table pay off table can be a useful way to represent and analyse a scenario where there is a range of possible outcomes and a variety of possible responses.

The decision of confessing by both the individuals depends on the period of imprisonment. Indeed cell d offers the lowest combined prison time of any of the outcomes in the payoff matrix. A payoff matrix includes data for opponents strategies and outcomes. The payoff matrix assigns each alternative action a row of possible payoffs.

The cell with both payoffs circled is a nash equilibrium. We can do the same analysis with each choice to see where all of the circles should go. Start a new campaign. They can either bid 0 1 or 2 dollars.