Types of games, Managerial Accounting

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Types of games

Four basic ways in which competitive situations (or games) can be classified are:

(a) Number of Competitors:

In game theory a competitor is characterized as a distinct set of interests and is usually referred to as a person.  Competitors could be individuals, group of individuals, corporation, and an army etc. The smallest no. of competitors is 2 and the situation is referred to as a two-person game. If there are more than two competitors, the resulting many-person competitive situation is called and N-person game.

(b) Nature of the payoff:

Games are also classified with respect to the nature of the payoff, that is, what happens at the end of the game. The distinction in this respect is between zero-sum games and non zero-sum games. If the sum of the payoffs to all players of a game is zero, counting winnings as positive and losses as negative, then, the game is zero-sum otherwise it is non zero sum.  Zero-sum games are strictly competitive games. In a non-zero sum game, the interests of competitors may best be served if they corporate with each other.

c) The amount of information the competitors have:

There are three basic aspects of the game about which the players need some information in order to play

(i) Who their competitors are
(ii) What their competitors can do
(iii) How the outcome of the game will be affected by the actions taken by participants.

Games in which each participant knows the payoff for winning, knows who the competitors are, and knows all the moves the competitors make as soon as they make them are referred to as games with perfect information. Games lacking full information on what competitors can do or on what the outcome of the game will be in certain situations are said to be games with incomplete information. Games with complete but imperfect information may also exist.

d) Strategies:

In game theory a strategy for a particular player is a plan which specifies his action for every possible action of his opponent. It is a complete plan for playing the game in every possible eventuality. Games can be categorized according to the number of strategies available to each player. If player 1 has M possible strategies and player 2 has N possible strategies, then the game is M x N. If the greatest no. of strategies available to any player is finite, then the game is finite and if at least one player has an infinite no. of available strategies, then the game is infinite.


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