Payoff matrix
Definition
A payoff matrix is a table used in game theory that shows the potential outcomes (payoffs) for each combination of strategies chosen by players involved in a game.
Analogy
Imagine you and your friend are deciding whether to study together or individually for an upcoming test. The payoff matrix would show the different grades you could potentially get based on your choices.
Related terms
Dominant strategy equilibrium: A situation in which each player's best strategy aligns with the other player's best strategy, resulting in a stable outcome.
Zero-sum game: A type of game where one player's gain is exactly equal to the other player's loss, meaning the total payoff remains constant.
Mixed strategy: A strategy in which players randomize their choices to create uncertainty and gain an advantage over opponents.
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