Page 196 - DCOM303_DMGT504_OPERATION_RESEARCH

Unit 9: Game Theory

Notes
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V = 3.2

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Caution Rules of dominance discussed are used when the payoff matrix is a profit matrix
for the player A and a loss matrix for player B. Otherwise the principle gets reversed.

Self Assessment

Multiple Choice Questions:
9. What happens when maximin and minimax values of the game are same?

(a) No solution exists (b) Solution is mixed
(c) Saddle point exists (d) None of the above
10. In a mixed strategy game

(a) No saddle point exists
(b) Each player selects the same strategy without considering other player’s choice
(c) Each player always selects same strategy
(d) All of the above
11. When the sum of the gains of one player is equal to the sum of losses to another player in
the game, this situation is known as
(a) Biased game (b) Zero-sum game
(c) Fair game (d) All of the above

9.5 Limitations of Games in Competition

1. In practice, the two competitors rarely have equal information or intelligence.
2. There may be situations in the managerial decisions when both the players may lose or
gain. Hence, it may not be zero-sum game.

3. Most of the competitive situations in which managerial decisions are taken are never
really two-person games as government or other bodies are always present as third or
fourth party in the game.
4. The technique of solving games involving mixed strategies is very complicated specially
for problems having large payoff matrices.
5. The principle of minimax implies that the businessman and his chances of maximum loss
but a dynamic businessman is always after profit and tries to maximize his gains or profit
even by taking greater risks.
In spite of these limitations the technique has wider applications as it helps us to learn how to
approach and understand a conflict situation and how to improve our decision process.

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