Introduction to Game Theory

Game Representations and Nash Equilibrium

February 10, 2009

Representing Games
Before talking about games we should get some idea of how to represent them
mathematically. We will focus on a certain class of games, called perfect
information games, in which each player knows all moves that have taken
place and the possible moves each player has at all times.

We’ll start off with some definitions:

Normal Form Game

We define a normal form (stragetic form) game as follows:
• A finite set of players N = {1, 2, ...n}
• Each player i ∈ N chooses actions from a strategy set Si
• Outcomes are defined by strategy profiles which consist of all the
strategies chosen by individual players. Mathematically, the set of
strategy profiles are defined as S = S1 × S2 × . . . × Sn
• Players have preferences over the outcomes (note, NOT preferences over
their actions), denoted as i . Usually these preferences are defined by
a utility function, ui : S → R that maps each outcome to a real
number. (This is sometimes called a payoff function).
So an instance of a game might be represented by the tuple (N, (Si), (i )),
containing the players, strategy sets, and preferences.

Let’s look at an example and get some practice working with the notation.

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Example
First we’ll consider a simple problem we can model as a normal form game.
Consider the following situation: you want to meet three of your friends
somewhere on MIT’s campus to go hacking. Each of you might go to one
of four places: State Center (C), the Green Building (G), the dome (D), or
Kresge (K). Now that we have a “game,” we’ll analyze it using the definition
above:

Players
To make things easier, we’ll name you and your friends, and call the set of
players N = {You, Stavros, Helen, Paris}

Stategy Sets
In this situation, each player’s strategy set, SY ou , SStavros , SHelen , SP aris , is
the same: (C, G, D, K). It consists of the four possible meeting places.

Outcomes
Above we definited an “outcome” to be some s ∈ S, where S = SY ou ×
SStavros × SHelen × SP aris . First we’ll quickly review some mathematical no-
tation. Also see the cheat sheet at the end of these notes that might be useful.

The symbol × when used with sets is called a Cartesian Product. It

means to take all ordered tuples consisting of one element from each set in
the product. So for example if B = {1, 2} and C = {3, 4}, then A = B × C
consists of the tuples (1, 3), (1, 4), (2, 3), and (2, 4). So the first item in each
element of A comes from the set B, and the second comes from the set C.

Now we are ready to definte the outcomes, S = SY ou × SStavros × SHelen ×

SP aris , in our game. The elements in S are:
(D, D, D, D)
(K, K, K, K)
(C, C, C, C)
(G, G, G, G)
(G, D, D, D)
etc., including all 44 combintations and possible orderings of K, C, D, and G.

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So, for example (K, G, C, D) is the outcome where You go to Kresge, Stavros
goes to the Green Building, Helen goes to the Stata Center, and Paris goes
to the dome.

Preferences
First we will define some notation for preferences: we will say a  b if in all
cases b is preferred to at least as much as a.

As noted above, it is easier to make a preference relationship if outcomes

are mapped to real numbers using a utility function ui for each player i. So
for any outcomes si and sj , si k sj iff uk (si ) ≤ uk (sj ). That is, a player k
prefers one outcome, sj , over another, si , if and only if that player’s utility
function is higher for that outcome.

In this case it makes sense that you should prefer outcomes where as many of
you meet at the same place as possible, since hacking by yourself isn’t nearly
as fun. (In the case where there might be more than 4 people we are talking
about, we might define a utility function that ranked huge groups of people
lower, since you don’t want a mob of a hundred people hacking, but for now
we’ll set our goal at getting all four people in the same place). So we’ll set
the utility function to be the same for each player and define it as follows:

ui : (max # people meeting at the same place)+0.5∗(# times this max occurs - 1)

So if all four of you meet at the same place, the utility (as we will call the
value of the utility function) will be 4, if only 3 of you meet it will be 3, if
two of you meet at the dome and two of you at State, the utility will be 2.5,
etc. Note that outcomes with the same utility have the same preference level.

If we wanted to make things even more complicated, we could make each

player have preferences over meeting spots, some players hoping that annoy-
ingly loud person won’t come along, etc.

Now that we know about the preference relation, we’ll define some more
conventional notation related to strategy:

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• We define s−i to be the set of strategy choices of all players except i. So

if Stavros has chosen G, Helen C, and Paris D, then s−Y ou = (G, C, D).
• The best response function for a player i ∈ N is defined as
BRi (si ) = {si ∈ Si : ui(s′i , s−i) ≤ ui (si , s−i)∀s′i ∈ Si }
Or, in English, the best response function gives the strategy si for player
i from his possibly strategy set Si , given that he knows all the other
players’ strategies in s−i , that maximizes player i’s utility function.
Now we will look at perhaps one of the most famous game theory model
problems, the prisoner’s dilemma. Two suspects are arrested as suspects
in a crime investigation. For our sake, let’s say someone has stolen Pandora’s
box, and both Helen and Stavros are accused and thrown into jail. If both
of them don’t confess, they will both spend three years in prison. If only one
of them confesses, he or she will be freed and used as a witness against the
other, who will then have to spend four years in jail. If both confess, the
judge will go easy on them and give them both sentences of only one year.
This situation can be modeled with the table below:
Don’t Confess Confess
Don’t Confess 3,3 0,4
Confess 4,0 1,1
If the players cooperate and both confess, then they can both get off easy with
only one year in prison. But after investigating things further it is clear that
no rational player would confess. No matter whether one prisoner chooses to
confess or not confess, the other is always better off not confessing. If Stavros
confesses, then Helen gets 0 years in prison if she doesn’t confess versus 1
year in prison if she confesses. If Stavros doesn’t confess, then Helen gets 3
years in prison if she doesn’t confess versus 4 if she does. Therefore, if both
players are rational, and for the moment we are assuming Stavros and Helen
are, even though they were involved in that whole silly Trojan horse business
back in the day and then had the foolishness to play with Pandora’s box, both
will choose not to confess and therefore will end up with three year sentences.

Game theoriests talk about this relationship among strategies in terms of

dominance. We say that a strategy s′i is strongly dominated by another
si if:
∀s−i ∈ Si , ui(si , s−i ) > ui (s′i , s−i )

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That is, for any combinations of actions for all of the other players, the move
si has a higher payoff than the action s′i . A strategy is weakly dominated
if :
∀s−i ∈ Si , ui (si , s−i) ≥ ui (s′i , s−i )
and for at least one choice of s−i the inequality is strict, that is, the ≥ turns
into a >. In games where there are more than two actions, it is also possible
to have one action dominated not by a single other action, but by a combi-
nation of others.

For Stavros and Helen, confessing is strongly dominated, and so neither

player has any reason to confess. Keep these games and definitions in mind
as they will be useful to us in the next section.

Extensive Form
Another way to represent a game is in extensive form. This type of game
notation represents games using game trees, which is how we will represent
most of the two-player strategy games we look at. A game tree is a directed
graph with nodes being game board positions and edges being moves. Each
“level” of the tree, representing a move by one player, is called a ply . The
leaves of the tree are possible game outcomes. Each vertex, called a deci-
sion node, is labeled with the player that makes a decision at that point.
A decision node represents every possible state of a game as it is played,
starting from the initial node and ending with the terminal node which
assigns final payoffs to the players.

So an extensive form game is represented with the following items:

• players N = {1, 2, 3, . . . , n}
• a set H of sequences (the histories) of the game, where no sequence
is a subhistory of another sequence, defined by:
– ∅ is a member
– if (sk )k=1...K ∈ H and L < K, then (sk )k=1...L ∈ H, where sk is an
action after step k of the game.
– if an infinite sequence (sk )∞ k
k=1 has (s )k=1...L ∈ H for all integers L,
then (sk ) ∈ H. The set of histories in H that are infinite or ter-
minal (there is no sk+1 : (skk=1...k ) ∈ H) is denoted as Z.

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• a function P that assigns a player to every proper subsequence of every

terminal history. We define P (h) to be the player who moves after the
subhistory h.
• for each player i ∈ N, a preference relation i over the set of terminal
histories, Z.
So the tuple hN, H, P, (i)i defines an extended form game.

Games in which there are a finite number of branches are called finite
games, and those for which the longest branch is finite are said to have
a finite horizon.

We define a player j’s strategy as a function that assigns an action for

player j to each h for which P (h) = j. That is, a strategy defines what ac-
tion j should take at every point it gets to make a decision during the game.

As an example, consider the following situation: Helen and Stavros happen

upon six olives that have fallen on the ground near their home in Athens.
Helen suggests a scheme for dividing up the olives between them, and Stavros
can say either “yes,” in which case they divide the olives according to what
Helen suggested, or “no,” in which case both of them get zero olives.
H

S (6,0) S (3,3) S (0,6)

(6,0)(y) (0,0)(n) (3,3)(y) (0,0)(n) (0,6)(y) (0,0)(n)

So if Helen proposes (6,0), with her getting six and Stavros getting 0, if
Stavros says yes the distribution will be (6,0), and if he says no both of them
will get no olives.

In terms of extensive form game notation, we have the following:

• N = {Helen, Stavros}
• H = {∅, (6, 0), (3, 3), (0, 6), ((6, 0), y), ((6, 0), n), ((3, 3), y), ((3, 3), n), ((0, 6), y), ((0, 6), n)}
• P (∅) = Helen, P (h) = Stavros∀h 6= ∅.

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Nash Equilibrium
Now that we have learned how to define games, we will begin looking at
how to “solve” games. The most commonly used concept in looking at game
solutions is the Nash Equilibrium (NE). The NE is conceptually the state
of the game where if each player was given the chance to change strategies
given all of the other players’ strategies, the player would not be able to
profitably deviate from its current strategy. The first type of NE we examine
assumes pure strategy games, where every player chooses one strategy and
sticks with it.

Normal Form NE
The NE for a normal form game hN, (Si ), (i )i is a strategy profile s∗ ∈ S
of actions such that for each player i ∈ N we have:

(s∗−i , si ) i (s∗−i , s∗i )∀si ∈ Si

So every player prefers the strategy profile s∗ to any other strategy, given all
the other players’ strategies s∗−i .

We can also define the Nash equilibrium in terms of best response func-
tions. If BRi (s−i ) is player i’s best response to a strategy profile s−i , then
the Nash Equilibrium is a strategy profile s∗ for which:

s∗i ∈ BRi (s∗−i )∀i ∈ N

So a game could be solved by finding the best response function of each

player, and then finding a profile s∗ that is in each BRi . This can be mod-
eled as a set of N equations with N unknowns and solved as a linear program.

Let’s find the NE for the games we have examined so far. In the original
problem meeting your friends to go hacking, can you find the equilibrium
strategy profile? Well, there are several:
(D, D, D, D); (C, C, C, C); (G, G, G, G); (K, K, K, K).
As long as you all meet at the same place, no player can profitably deviate
(i.e., increase the value of their utility function) by choosing a different strat-
egy.

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Consider the following game, called matching pennies: Stavros and Helen
flip one coin each. If the coins match, Helen has to give Stavros a dollar, but
if the coins differ, Helen gets to take Stavros’s dollar. We can represent this
game in a table:

T H
T 1,-1 -1,1
H -1,1 1,-1
Helen is the “column player” and Stavros is the “row player.” So when Helen
flips tails and Stavros flips heads, this corresponds to the entry in the second
row of the first column, or (-1,1). Meaning the row player, Stavros, loses a
dollar while the column player, Helen, gains a dollar.

This type of game, in which what one player loses is exactly what the other
player gains, is called a zero sum game. Another name is constant sum.
You can think of it as the entire sum of money between Stavros and Helen
staying the same the whole time, but the amount of money each individual
player has changes with game play.

What is the NE for matching pennies? (Let’s assume for a second that
each player chooses whether or not the pennies are heads or tails.) In this
game, there is no NE. If Helen picks heads, Stavros will pick heads so the
coins are the same and he wins. But given this strategy profile, Helen would
pick tails so that the coins differ. There is no strategy profile in which each
player would not want to deviate. This is an example of a pure strategy
game in which the players have diametrically opposed goals, and there is
no NE. The same situation happens in rock paper scissors. Can you see why?

Now look at prisoner’s dilemma. We said earlier that no matter what another
player chooses, a player always does better by choosing not to confess. So
this game has a unique NE, which is (Don’t Confess, Don’t Confess).

We have seen examples of games using pure strategy that have no NE, more
than one NE, and one unique NE. It can be shown that if a player has a finite
number of strategies to choose from and can choose different strategies given
by a probability distribution, that an NE does exist. As a quick example,

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consider matching pennies and rock paper scissors. In matching pennies, the
NE occurs when each player chooses heads and tails with 50-50 probability.
This is called mixed strategy and we will deal with this more when we talk
about maximinima. Nash showed that every game has a mixed strategy NE.

Extensive Form NE
If we define O(si ) to be the outcome associated with strategy profile si , then
the NE for an extensive form game has:

O(s∗−i, si ) i O(s∗−i, si ∗)∀Si of player i

So in our olive game with Helen and Stavros, the strategy profile ((3,3),y) is
an NE, since neither Helen nor Stavros would get more olives (their utility
in this case) by changing strategies.

Let’s look at another extensive form game:

(1)

X (2) Y (2)

w (1,1) x (0,2) y (1,1) z (2,2)

where the number in parentheses is the player (1 or 2) that makes the decision
at that point, and the tuples at the terminal nodes are the payoffs for player
1, then player 2. The NE of this “game” as defined above would be the
strategy profile (Y, z), yielding the payoff (2,2). But suppose for a second
that player one chose X, (which he shouldn’t, since it is weakly dominated
by Y ). Now player 2 has to make a decision based on the history h = (X).
Now player 2 is looking at the subgame of h, or the part of the game that
follows h, defined as Γ(h) = hN, H|h , P |h , (i )|h i. We can define another
type of NE, the subgame equilbibrium for an extended game, as follows:

O(s−i|∗h , si |h ) i |h O(s∗−i|h , si ∗ |h )∀S i |h of player i

So the subgame equilibrium given the h defined above is (X, x) (a bad deal
for player 1...).

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Solving Games
Solving a Game
Many board games with seemingly simple rules have long stumped both hu-
mans and computers. Solving games depends on the decision complexity,
or the difficulty in making decisions, and the space complexity , or the size
of the search space over the possible moves and their consequences.

Good players look ahead to the possible game situations a move might lead
to, which is no simple task when the search space reaches billions of billions
of possibilities! There is much research in the field of artificial intelligence
in creating computers that are able to look many branches ahead in a game
tree to determine the best move.

What it means to solve a game

There are three basic types of “solutions” to games:

1. Ultra-weak The result of perfect play by each side is known, but the
strategy is not known specifically.

2. Weak The result of perfect play and strategy from the start of the
game are both known.

3. Strong The result and strategy are computed for all possible positions.

By perfect play, we mean each player cannot do any better, given the other’s
strategy. So to “solve” a game means to find it’s Nash equilibrium.

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Iterated Dominance
The method of iterated dominance is one way to find the pure strategy
NE (if it exists) for a normal form game.

Consider a game with the following payoffs (player 1 is the row player, player
2 is the column player):
A B C D
A (5,2) (2,6) (1,4) (0,4)
B (0,0) (3,2) (2,1) (1,1)
C (7,0) (2,2) (1,5) (5,1)
D (9,5) (1,3) (0,2) (4,8)
Now when player 1 chooses a move, it will not choose A, since it is weakly
dominated by C. But player 2 knows player 1 is rational, and knows he will
not choose A. So the choices left are:
A B C D
A
B (0,0) (3,2) (2,1) (1,1)
C (7,0) (2,2) (1,5) (5,1)
D (9,5) (1,3) (0,2) (4,8)
Now for player 2, D is dominates A, so player 2 won’t choose A.
A B C D
A
B (3,2) (2,1) (1,1)
C (2,2) (1,5) (5,1)
D (1,3) (0,2) (4,8)
Now for player 1, B dominates both C and D, so he won’t play either of
those:
A B C D
A
B (3,2) (2,1) (1,1)
C
D
Player 2 has B dominating both C and D:

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A B C D
A
B (3,2)
C
D

So the only choice left, the NE, is B for each player.

Finding Solutions from Game Trees

Once a complete game tree is known, we can use the following steps to solve
the entire tree:

1. Color the final play according to which player won. We will use black
for player 1, and white for player 2:

2. Look at the next ply up.

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• If there is a node imeediately below the current node colored op-

posite than the current player at that node, then color the current
node the color of the opposite player.

• If all immediately lower nodes are colored the same as the current
player, also color the node that same color.

• Else color the node as a tie (we will use gray for a tie).

3. Move up the tree, repeating this for each ply. (In this case, we already
completed the tree with step 2).

Exercises
• Begin drawing a tic-tac-toe game tree. See how many branches you
can color as wins for each player.

• Consider the “centipede” game, with the following rules: two players
alternate taking turns. On each turn, the player can decide to either

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continue the game, or stop. A player gets a higher payoff with stopping
at turn t compared to the other player stopping the game at time t + 1,
but gets an even higher payoff if neither of these events happen (i.e.,
the game continues).

– Define the player function for this game.

– Draw a possible tree for this game (there are many), remembering
to label nodes with players and terminal nodes with the payoffs
for each player.
– Write out the possible histories for this game (going only up to
period T = 6).
– What are the possible subgame equilibria?

Appendix
Additional Topics
Complexity
We will often form questions about solving games in terms of some n, usu-
ally the size of a game board or a similar measure, and want to know how
the number of steps needed to find the solution grows with n. It is worth
mentioning a couple things to note about complexity here that we will refer
to later on.

Problems are often classified using the following terms:

• P (polynomial) The problem is solvable in polynomial time. That is,

the number of steps needed to find a solution is a polynomial in n.

• NP (non-deterministic polynomial) These problems are in general very

difficult to solve, but once a solution is found it can be verified in
polynomial time. All P problems are also NP problems, so P ⊆ NP ,
but you can get a million dollars if you can prove or disprove whether
P=NP or not. One argument that there is reason to believe P=NP is
that the existence of a good algorithm for verifying a solution to an
NP problem might somehow imply that there is a good algorithm for
solving it.

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SP.268 Introduction to Game Theory

• NP-complete All NP problems can be reduced to a group of prob-

lems called NP-complete by a polynomial transformation. If there is a
solution to one NP-complete problem then there is a solution to all.

• NP-hard This term means a problem is at least as hard as any NP-

complete problem.

• PSPACE This describes problems that can be solved with a limited

amount of storage space but unlimited time. Both P and NP belong
to PSPACE, so P ⊆ NP ⊆ P SP ACE.

• EXPTIME The set of all decision problems solvable in O(2p(n)) time.

EXPTIME is a superset of PSPACE.

Representing Games on Computers - Game Boards

We have looked at mathematical representations of games. Now we will see
how to create computer representations.

Arrays
Probably the most intuitive way to represent a game board is by an array,
here one array entry corresponds to one cell on the game board. For example,
for a chessboard the cells might be labeled as follows:

and stored in an 8 × 8 array. The entries in the array could be strings, such
as “empty(e)”, “wN”, “bK” corresponding to an empty cell, white Knight,
and black king, for example. The array below represents the starting postion
of a chess board:

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SP.268 Introduction to Game Theory

[[wC wN wB wQ wK wB wN wC]
[wP wP wP wP wP wP wP wp]
[e e e e e e e e]
[e e e e e e e e]
[e e e e e e e e]
[e e e e e e e e]
[bP bP bP bP bP bP bP bP]
[bC bN bB bW bK bB bN bC]

It is also common to use numbers to represent pieces: 0 for empty, 1 for

white pawn, -1 for black pawn, 2 for white castle, -2 for black castle, etc.

A Hex Board (we will meet the game of Hex next week) might be repre-
sented as an 11 by 11 array:

[[0 0 0 0 0 1 0 0 0 0 0]
[0 0 0 0 1 1 0 0 0 0 0]
[0 0 0 0 0 0 0 0 0 0 0]
[0 0 0 0 1 0 0 0 0 0 0]
[0 0 0 0 -1 0 0 0 -1 0 -1]
[0 0 0 0 1 0 -1 0 0 0 0]
[0 0 -1 0 -1 0 -1 0 0 0 0]
[0 0 0 1 0 0 0 0 0 0 0]
[-1 0 0 0 0 0 0 0 0 0 0]
[0 0 0 0 0 0 0 0 0 0 0]
[0 0 0 0 0 0 0 0 0 0 0]]

with entries 0 for empty, 1 for black, and -1 for white.

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SP.268 Introduction to Game Theory

Bit Boards
One interesting scheme used widely in computer chess is the bit board .
This representation uses a 64 bit string for each piece, with a 1 if that piece
is in the square and a 0 if not. So the bit board for white pawns in the initial
chess game state is:

[[0 0 0 0 0 0 0 0]
[1 1 1 1 1 1 1 1]
[0 0 0 0 0 0 0 0]
[0 0 0 0 0 0 0 0]
[0 0 0 0 0 0 0 0]
[0 0 0 0 0 0 0 0]
[0 0 0 0 0 0 0 0]
[0 0 0 0 0 0 0 0]]

As one example of how this notation can be useful, white can compute all the
squares occupied by black by bitwise ORing the bitboards for each of black’s
pieces, etc. More resources on this method and a great tutorial applying it to
checkers can be found online at http://www.3dkingdoms.com/checkers/bitboards.htm.

Graphs
While not used that widely, it might make sense to represent some game
boards on a graph. A good graphing library for python is networkx, but
there are plenty out there. You can create a graph by connect adjacent cells
with edges and name them by their position on the board. We’ll talk more
about graph theory next week.

There will be a full tutorial online about making game boards.

Cheat Sheet
Symbols
• ∀ - “Forall”

• ∈ - “In.”

• ∅ - “Empty set”

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• x|h - x given that h has already occurred

• i - preference relation for player i

• ui(s−i , si ) player i’s utility function when he chooses strategy si and

everyone else’s strategies are defined by s−i

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