10/06/17

Sequen0al Moves vs Simultaneous Moves

Sequen,al Move Games: strict order of play
Game Theory In reality, many games combine sequen,al- and simultaneous-move
situa,ons
We rst understand sequen,al move games, then simultaneous
Sequen,al Move Games move games, then combine them

Game Tree Solving the Game by Backward Induc0on

Also called extensive form of a game Incumbent has the last move; what
will it choose?
How is it dierent from a decision tree?
Acquiesce
Nodes: Ini,al node, Decision/ Ac,on
node, Terminal node In the preceding play, Challenger can
gure out what Incumbent is going to
Branches: Choices do i.e. acquiesce
Players & Payos = Challenger, Challenger can now evaluate its
Incumbent choices knowing what Incumbent will
do and the resul,ng payos
Strategies
What will Challenger choose?
Challenger: in, out
Incumbent: acquiesce, ght In

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 10/06/17

A Game against Yourself! The PM race game

Two poli,cians, NaMo and RaGa are poten,al PM
candidates.
Suppose you are deciding
whether to smoke. Todays You , Future You NaMo has declared his candidacy. RaGa has to
Continue -1, 1
decide whether or not to enter the race a[er which
Is it a game or a decision? Future You NaMo decides whether or not to go on an
extensive campaign tour.
If you try it, you have the Try 1,- 1
further decision of whether to Not The poten,al payos, RaGas rst, are:
con,nue.
Todays You In-Tour {1,1}.
But once you try it, you become
an addict (future you) Out-Tour {3,3}.
Not In-No tour {4,2}.
Therefore when you make your Out-No tour {2,4}.
choice today, you have to look 0
ahead and factor future you into
your current decision Decide whether to enter if you are RaGa.
What will you choose today? Begin by construc,ng the game tree.

Equilibrium in the PM race game Order Advantages

The PM race game again.
If RaGa chooses in we see RaGa , NaMo Two poli,cians, NaMo and RaGa are again poten,al PM candidates. NaMo has
that NaMo will choose no Tour 1, 1 declared his candidature for the elec,on, but has not decided on whether to
NaMo
tour and the payos will launch any campaign tour.
be {4,2}. In
No tour 4, 2 This ,me NaMo get the rst move and must decide whether or not to go for
If RaGa chooses out we campaign tour. Following this RaGa decides whether or not to enter the race.
RaGa
see that NaMo chooses no The poten,al payos, NaMos rst, are as before:
tour and the payos are
{2,4}. Tour-in {1,1}.
Out Tour 3, 3
Tour-out {3,3}.
So RaGa chooses in and NaMo No tour-in {2,4}.
NaMo chooses no tour. No tour-out {4,2}.
2, 4
No tour
Does the move sequence change the outcome?

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 10/06/17

Equilibrium in the new PM race game. Sequen0al move games

More than 2 players.

The logic of solving sequen,al move games with more than two players is the
If NaMo chooses tour we see , RaGa
NaMo, same as with two players.
In 1, 1
that RaGa will choose out and RaGa Apply backwards induc,on..think ahead and reason back.
the payos will be {3,3}. Tour 3, 3
One technique that allows us to keep track of this process is o[en referred to as
Out pruning the tree.
If NaMo chooses no tour RaGa NaMo
Consider three computer rms: Dell, HP, and Gateway. Each can manufacture
chooses in and the payos are either in or out of the US
{2,4}. Each manufacturer can benet from employing cheap foreign labor and can benet from
In 2, 4 learning from the others experience of dealing with foreign regula,ons, unions, customs
No tour RaGa
So NaMo chooses tour and and the like. However there is not enough skilled foreign labor for all three rms. The
RaGa stays out. Out 4, 2
following game might arise.

Is there a rst mover advantage?

Equilibrium in the Sequential move game with more than 2 Equilibrium in the Sequential move game with more than 2
players. players.
To prune the tree. Payoffs
US 1,5,5
Payoffs Gateway
US 1,5,5 First consider all the
Gateway US

US
choices Gateway would not HP
Foreign
5,5,2

HP
Foreign
5,5,2 make and strike out these
branches. US Gateway US 5,2,5

US 5,2,5
US Gateway Foreign

Foreign
Dell Foreign 3,4,4

Dell Foreign 3,4,4

US
Gateway 2,5,5
US
Gateway 2,5,5
US
Foreign
US HP Foreign 4,3,4
Foreign
HP Foreign 4,3,4

US 4,4,3
Gateway
US 4,4,3
Gateway
Foreign
Foreign
Foreign 4,4,4
Foreign 4,4,4

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 10/06/17

Equilibrium in the Sequential move game with more than 2 Equilibrium in the Sequential move game with more than 2
players. players.
To prune the tree. Payoffs
1,5,5
To prune the tree. Payoffs
US
Gateway US 1,5,5
Gateway
First consider all the US First consider all the
US
choices Gateway would not HP
Foreign
5,5,2 choices Gateway would not HP
Foreign
5,5,2

make and strike out these make and strike out these
5,2,5
branches. branches.
US 5,2,5
US Gateway US Gateway US

Foreign Foreign

hen prune out the

T Dell 3,4,4
hen prune out the
T Dell Foreign 3,4,4
Foreign
choices HP would not choices HP would not
make. Gateway
US
2,5,5 make. Gateway
US
2,5,5

US

Foreign
HP
US
Foreign 4,3,4
inally prune out the
F Foreign
HP Foreign 4,3,4

choices Dell would not US 4,4,3

Gateway
US 4,4,3 make. Gateway
Foreign
Foreign
4,4,4
hus, Dell chooses to
T Foreign 4,4,4

Foreign
locate overseas while HP
and Gateway stay in the US

Sequen0al move games Assignment (each group to submit, hand-wri5en, in the next class)
More than 2 moves
A slave has just been thrown to the lions in the Roman Colosseum. Three lions are
chained down in a line, with Lion 1 closest to the slave. Each lions chain is short enough
Suppose you are playing a game like chess with many moves. that he can only reach the two players immediately adjacent to him.
In principle the game can be solved by backwards induc,on. The game proceeds as follows. First, Lion 1 decides whether or not to eat the slave.
In prac,ce it is too complicated. If Lion 1 has eaten the slave, then Lion 2 decides whether or not to eat Lion 1 (who is
then too heavy to defend himself). If Lion 1 has not eaten the slave, then Lion 2 has no
This does not mean you dont think ahead. choice: he cannot try to eat Lion 1, because a ght would kill both lions.
Similarly, if Lion 2 has eaten Lion 1, then Lion 3 decides whether or not to eat Lion 2.
Think ahead a few moves and assess which situa,ons are possible.
Each Lions preferences are fairly natural: best (4) is to eat and stay alive, next best (3) is
Give a value to each of these intermediate situa,ons. to stay alive but go hungry, next (2) is to eat and be eaten, and worst (1) is to go hungry
and be eaten.
Play for highest intermediate value. Draw the game tree, with payos, for this three player game.
In chess this might involve crea,ng space to maneuver your pieces. Iden,fy the equilibrium in this game. Describe the strategies of each player, not just
iden,fy the payos.
Computer programs can, in theory, work out the op,mal game play. Is there a rst mover advantage to this game? Explain why or why not.