# Game theory between TBL teams

Initial Publication Date: December 17, 2018

## Summary

Using a game theory one-time pay-off matrix, student teams first predict the outcome and then play the game to see what occurs.

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## Context for Use

Intended for a Principles of Microeconomics course in which students learn elementary game theory. Prior to this exercise students need to know how to construct a game theory matrix and how to find a dominant outcome.

The activity will work only if there are several teams in the classroom (minimum of 5 teams; more is better.)

## Overview

Students learn to use a game theory pay-off matrix to predict the outcome of a one-time game. The pay-off is set so that defection is the likely outcome but one that does not benefit players. Teams are presented with the payoffs (for course points) that will be awarded in a game to be played later. Teams predict the outcome using game theory and explain their predictions to other teams. Then team play the game to see the outcome.

## Expected Student Learning Outcomes

Students will be able to construct a game theory payoff matrix and make a prediction about the dominant outcome.

## Information Given to Students

You will play a competitive game with other teams in this class. Each team will make a decision whether to cooperate or defect. If all teams choose to cooperate then each student will receive one bonus point. If one team defects and all other teams cooperate then students on the defect team will each receive 5 bonus points while students on the teams that cooperated will each lose one point. If more than one team defects then all students receive zero points.

## Teaching Notes and Tips

Payoff matrix (Microsoft Word 2007 (.docx) 12kB Feb11 18)

• The payoff matrix can be varied so that it fits the course syllabus and the instructor's teaching style. It is important that the matrix have a dominant outcome of more than one team defecting.
• Giving and taking away course points may be problematic. One option is to announce after the simulation that "everyone will receive five points for participating."

## Assessment

The key will be student ability to transfer this understanding to other situations. Game theory has many similar, 'Prisoner dilemma' situations.

Students can be asked to revise the payoff matrix so that different outcomes are likely. What will cause more cooperative to occur?