In game theory, a "payoff matrix" is a table that shows the following, exceptMultiple Choice the profits to each firm or player that would result from various strategy combinations. the target payoffs that each firm or player is aiming for in their different strategies. the interdependence of the firms’ or players’ profits, based on their alternative actions. the alternative results that the firms or players would get, based on their actions and those of others.

Game theory refers to a theoretical mathematical model for conceiving social scenarios among…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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In game theory, a "payoff matrix" is a table that shows the following, except

Multiple Choice

the profits to each firm or player that would result from various strategy combinations.
the target payoffs that each firm or player is aiming for in their different strategies.
the interdependence of the firms’ or players’ profits, based on their alternative actions.
the alternative results that the firms or players would get, based on their actions and those of others.

Definition Definition Economic decision-making framework that analyzes how different players optimize their outcomes with given pay-offs corresponding to their available strategies. The assumptions of game theory are: The number of players or competitors are finite/limited; All participants are rational The rules of the game are known to every player; and Each participant has a finite set of actions. A common way in which game theory is presented as an ( m x n ) matrix in which m represents the strategies of row player and n represents the strategies of column player. There are several limitations of game theory: Many businesses have a large number of competitors, and selecting an optimal strategy in these circumstances is difficult; Real-life business operating environments are full of uncertainty and difficult to model as a game theory; and The assumption of rationality and utility maximization isn't always an accurate portrayal of human nature.

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