Game:

A game is a formal description of a strategic situation.

Game theory:
Game theory is the formal study of decision-making where several players
must makechoices that potentially affect the interests of the other players.

Game theory is the science of strategy. It attempts to determine

mathematically and logically the actions that players should take to secure
the best outcomes for themselves in a wide array of games. The games it
studies range from chess to child rearing and from tennis to takeovers. But
the games all share the common feature of interdependence. That is, the
outcome for each participant depends on the choices (strategies) of all.
In game theory: Different types of games help in the analysis of different
types of problems.
TYPES OF GAME THEORY
The different types of games are formed on the basis of number of players
involved in a game, symmetry of the game, and cooperation among players.

1. Cooperative and Non-Cooperative Games:

Cooperative games:
Cooperative games are the one in which players are convinced to adopt a
particular strategy through negotiations and agreements between players.
Let us take the example cited in prisoners dilemma to understand the
concept of cooperative games. In case, John and Mac had been able to
contact each other, then they must have decided to remain silent. Therefore,
their negotiation would have helped in solving out the problem.
Example:
The players may be severalparties in parliament. Each party has a different
strength, based upon the number of seatsoccupied by party members. The
game describes which coalitions of parties can form amajority, but does not
delineate, for example, the negotiation process through which anagreement
to vote en bloc is achieved.

Non-cooperative games:
Non-Cooperative game refer to the games in which the players decide on
their own strategy to maximize their profit.

example:
A non-cooperative game is prisoners dilemma. Non-cooperative games
provide accurate results. This is because in non-cooperative games, a very
deep analysis of a problem takes place.
2. Normal Form and Extensive Form Games:
Normal form GAMES:
Normal Form games refer to the description of game in the form of matrix. In
other words, when the payoff and strategies of a game are represented in a
tabular form, it is termed as normal form games. Normal form games help in
identifying the dominated strategies and Nash equilibrium. In normal form
games, the matrix demonstrates the strategies adopted by the different
players of the game and their possible outcomes.
Extensive form games:
Extensive games are the one in which the description of game is done in the
form of a decision tree. Extensive form games help in the representation of
events that can occur by chance. These games consist of a tree-like structure
in which the names of players are represented on different nodes.
In addition, in this structure, the feasible actions and pay offs of each players
are also given. Let us understand the concept of extensive form games with
the help of an example. Suppose organization A wants to enter a new market,
while organization B is the existing organization in that market.
EXAMPLE OF NORMAL FORM AND EXTENSIVE FORM GAMES:
Organization A has two strategies; one IS to enter the market and challenge
to survive or do not enter the market and remain deprived of the profit that it
can earn. Similarly, organization B also has two strategies either to fight for
its existence or to cooperate with organization A.
Figure-2 shows the decision tree for the present situation:

In Figure-2, organization A takes the first step that would be followed by

organization B later on. In case, organization A does not enter the market,
then its payoffs would be zero. However, if it enters the market, the market
situation would be totally dependent on organization B.

If they both get into the price war, then both of them would suffer the loss of
3. On the other hand, if organization B cooperates, then both of them would
earn equal profits. In this case, the best option would be that organization A
enters the market and organization B cooperates.
3. Simultaneous Move Games and Sequential Move Games:
Simultaneous games:
Simultaneous games are the one in which the move of two players (the
strategy adopted by two players) is simultaneous. In simultaneous move,
players do not have knowledge about the move of other players. On the
contrary, sequential games are the one in which players are aware about the
moves of players who have already adopted a strategy. When players
effectively make decisions at the same time. They dont know the choices of
other players when making their choices
Examples:
The Prisoners Dilemma
A game of Rock, Paper, Scissors
Individual plays in a game of Football
Penalty shoot-outs in soccer matches
Serving and receiving in Tennis
Closed bid auctions
Athletes choosing to dope or not to dope
Sequential games:
In Sequential games the players do not have a deep knowledge about the
strategies of other players. A player has knowledge that the other player
would not use a single strategy, but he is not sure about the number of
strategies the other player may use. Simultaneous games are represented in
normal form while sequential games are represented in extensive form.
A sequential game is one in which the players take alternate turns to make
their choices. It is important to know who is going to move first in a
sequential game as their may be a first mover advantage, or even a first
mover disadvantage.
Examples:
A game of chess
Open-outcry auctions with sequential bidding
Salary negotiations between employer and employee
Haggling with a trader to buy a second hand car
Making offers on a property
Brief Example:

Suppose organizations X and Y want to minimize their cost by outsourcing

their marketing activities. However, they have a fear that outsourcing of
marketing activities would result in increase of sale of the other competitor.
The strategies that they can adopt are either to outsource or not to outsource
the marketing activities.
The payoff matrix for the two organizations is shown in Table-10:

In Table-10, it can be seen that both the organizations X and Y are unaware
about the strategy of each other. Both of them work on the perception that
the other one would adopt the best strategy for itself. Therefore, both the
organizations would adopt the strategy, which is best for them.The same
example can also be used for the explanation of sequential move games.
Suppose organization X is the first one to decide whether it should outsource
the marketing activities or not.
The game tree that represents the decision of organization X and Y is shown
in Figure-3:

In Figure-3, the first move is taken by organization X while organization Y

would take decision on the basis of the decision taken by X. However, the
final outcome depends on the decision of organization Y. In the present case,
the second player is aware of the decision of the first player.
4. Constant Sum, Zero Sum, and Non-Zero Sum Games:
Constant sum game:
Constant sum game is the one in which the sum of outcome of all the players
remains constant even if the outcomes are different.
Zero sum game:
Zero Sum game is a type of constant sum game in which the sum of
outcomes of all players is zero. In zero sum game, the strategies of different
players cannot affect the available resources.
Moreover, in zero sum game, the gain of one player is always equal to the
loss of the other player. On the other hand, non-zero sum game are the
games in which sum of the outcomes of all the players is not zero.
non-zero sum game:

Non-Zero sum game can be transformed to zero sum game by adding one
dummy player. The losses of dummy player are overridden by the net
earnings of players. Examples of zero sum games are chess and gambling. In
these games, the gain of one player results in the loss of the other player.
However, cooperative games are the example of non-zero games. This is
because in cooperative games, either every player wins or loses.
5. Symmetric and Asymmetric Games:
Symmetric games:
Symmetric games are the one in which strategies adopted by all players are
same. Symmetry can exist in short-term games only because in long-term
games the number of options with a player increases. The decisions in a
symmetric game depend on the strategies used, not on the players of the
game. Even in case of interchanging players, the decisions remain the same
in symmetric games.
Example: The best example of symmetric games is prisoners dilemma.
asymmetric games:
Asymmetric games are the one in which strategies adopted by players are
different. In asymmetric games, the strategy that provides benefit to one
player may not be equally beneficial for the other player. However, decision
making in asymmetric games depends on the different types of strategies
and decision of players.
Example:
Example of asymmetric game is entry of new organization in a market
because different organizations adopt different strategies to enter in the
same market.
Repetition GAMES:
Any of the previously mentioned kinds of game can be played any number of
times between the same players, and the game can be the same at each
play or can be state-dependent.
Repeated Games:
A game which is played more than once. A very common feature of applied
business. With repeated games there is more scope for co-operative
strategies to emerge credible threat power history of past behaviors Agents
learn by doing if someone continually serves to your backhand in tennis,
your backhand will improve.
Repeated games a crucial point is the reaction to a defective strategy by
another player
Tit for Tat Strategy if you defect, I defect in the next round
Grim Strategy if you defect, I will defect in all future rounds
EXAPLES:
The decisions on:
Pricing (Established supermarkets versus the Deep Discounters)

The size of marketing budgets (Coca Cola v Pepsi)

Research and development spend (Samsung v Apple v Huawei)
Capital investment and supply capacity forecasts (Cruise ships)
One-Shot Games
In one-shot games, players interact for only a single round (or stage). Thus, in
these situations there is no possible way for players to reciprocate (by
inflicting punishment or rewards) thereafter.
Repeated Games
In repeated games, players interact with each other for multiple rounds
(playing the same game). In such situations, players have opportunities to
adapt to each others behaviors (i.e., learn) in order to try to become more
successful. There can be finite-horizon repeated games where the same
game is repeated a fixed number of times by the same players, or infinitehorizon games in which the play is repeated indefinitely.
Dynamic Games

The case where the game changes when players interact repeatedly is what
can be called a repeated dynamic game, characterized by a state. These are
also called differential games. Unlike a repeated game where the agents play
the same game every time, in a dynamic game the state of the game
influences the play and the outcome. Important in this class are the so called
stochastic games, which are extensions of Markov decision processes to the
scenario with m multiple players, where probabilistic transitions are modeled.
We shall not cover these types of game in this monograph.