Types of Strategies

Dominant Strategy:

A dominant strategy is one that leads to the best possible outcome for a player, regardless of what the other players do. In other words, it is a strategy that always yields the highest payoff for a player, no matter what the competitors choose.
If a player has a dominant strategy, they will always choose it because it guarantees the most favorable result, making it a rational choice.
For example, in a two-player game, if one player’s dominant strategy is to choose a certain action, they will always pick that action even if the other player changes their strategy.

Nash Equilibrium Strategy:

The Nash equilibrium occurs when each player chooses the best strategy given the strategies of others. At this point, no player can improve their outcome by changing their strategy unilaterally. In other words, each player’s strategy is optimal, considering the strategies of others.
A Nash equilibrium represents a stable outcome in which players have no incentive to deviate because they are already making the best decision possible based on others’ choices.
For example, in a market competition, firms might settle on pricing that maximizes their respective profits, given the pricing strategies of their competitors.

Mixed Strategy:

In a mixed strategy, players do not choose one specific action but instead assign probabilities to various actions and select them randomly. This strategy is useful when there is no clear dominant strategy, and players are uncertain about what their opponents will do.
By randomizing their choices, players can keep their opponents guessing, which makes it difficult for the opponent to predict and counter their moves.
For example, in a game of rock-paper-scissors, players might use a mixed strategy by randomly choosing each option with equal probability to avoid being predictable.

Pure Strategy:

A pure strategy is a straightforward approach where a player consistently chooses one specific action, without any randomization.
This strategy works well in situations where one particular action is clearly the best response to the other players’ choices.
For example, in a chess game, a player may always choose a particular move when it offers a strategic advantage. A pure strategy is predictable and effective when a clear optimal action exists.

Maximin Strategy:

The maximin strategy is used by players who are risk-averse and want to maximize their minimum payoff. This strategy involves choosing the action that will guarantee the best possible outcome in the worst-case scenario. In other words, a player prepares for the worst possible result by selecting the strategy that provides the highest minimum payoff.
This strategy is often adopted in situations where the player wants to minimize the chance of a large loss.
For example, in a business investment, a company may choose a project that, while not the most lucrative, offers the lowest risk of failure.

Minimax Strategy:

The minimax strategy is used in zero-sum games, where one player’s gain is exactly the other player’s loss. In these games, a player will aim to minimize the maximum payoff that their opponent can achieve, effectively trying to prevent the opponent from gaining a large advantage.
This strategy helps ensure that a player’s worst outcome is as good as possible, given that their success comes at the expense of the other player.
For example, in a poker game, a player may use a minimax strategy to limit the amount of money an opponent can win.

Tit-for-Tat Strategy:

The tit-for-tat strategy is often used in repeated games and involves replicating the opponent’s previous move. If the opponent cooperates, the player also cooperates; if the opponent defects, the player defects as well.
This strategy promotes a balance between cooperation and competition. It rewards cooperation with continued cooperation and punishes defection by defecting in return.
Tit-for-tat is effective in maintaining long-term cooperation in situations like business partnerships or repeated negotiations, as it encourages mutual benefit while discouraging exploitation.

Trigger Strategy:

The trigger strategy is a form of strategy used in repeated games, where players initially cooperate but switch to a punitive action if the other player defects. Once the opponent defects, the player will respond by choosing a harsh or non-cooperative strategy indefinitely.
This strategy is designed to deter defection and ensure that players continue cooperating to avoid triggering the punishment.
For example, in trade agreements, a country might cooperate with another country but impose tariffs if the other country violates the agreement, making defection costly.

Sequential Strategy:

In a sequential game, players make decisions one after the other, rather than simultaneously. The sequential strategy involves players anticipating the moves of others and adjusting their decisions accordingly.
Players who move later have the advantage of observing earlier choices and can plan their strategies based on the expected responses of others. This strategy is common in negotiations, auctions, and other situations where timing and order of actions matter.
For instance, in a bidding auction, a player may choose their bid based on the bids placed by other participants.