A few months ago, we offered our listeners up to One Million Dollars! Unfortunately, we didn’t have to give away a cent, as Game Theory predicted all along.
This week, to celebrate the recent “rock scissor paper” World Championship, Kyle and Chaim play a game of “mismatched pennies”. Each puts down a penny on the table, choosing to lay the penny down showing heads or tails.
If the pennies both show heads, Chaim wins 3Â¢; if both show tails, Chaim wins 1Â¢, and if one is heads and the other tails, Kyle wins 2Â¢.
Thinking this through, second and triple guessing one’s opponent, is ultimately fruitless, as wonderfully illustrated in this scene from The Princess Bride
(Incidentally, game theory shows up in many movies, television shows and works of fiction!)
John von Neumann tells us, in his celebrated minimax theorem, that there is an optimal strategy for both players; each assigns a percentage to each of his options; the choice of which option to use is made randomly, by these percentages. Von Neumann tells us that there is no way to take advantage of knowing what the opponent’s optimal strategy is– that’s what makes it optimal!
But the game still might favor one player or the other, even if both are using their optimal strategy. This week’s puzzle then, is to answer: does this game of mismatched pennies favor Chaim or Kyle?