Game theory analysis when playing the wrong game

TL;DR

This paper explores the effects of players mistakenly understanding their opponents' goals in bimatrix games, analyzing all possible strict ordinal 2-by-2 cases to understand the impact of such errors.

Contribution

It introduces the first systematic analysis of games where players misinterpret opponents' payoffs, focusing on ordinal payoff matrices and their errors.

Findings

Analyzed all 78 strict ordinal 2-by-2 bimatrix games.

Identified how payoff misinterpretations affect game outcomes.

Provided a mathematical framework for incomplete information games.

Abstract

In classical game theory, optimal strategies are determined for games with complete information; this requires knowledge of the opponent's goals. We analyze games when a player is mistaken about their opponents goals. For definitiveness, we study the (common) bimatrix formulation where both player's payoffs are matrices. While the payoff matrix weights are arbitrary, we focus on strict ordinal payoff matrices, which can be enumerated. In this case, a reasonable error would be for one player to switch two ordinal values in their opponents payoff matrix. The mathematical formulation of this problem is stated, and all 78 strict ordinal 2-by-2 bimatrix games are investigated. This type of incomplete information game has not -- to our knowledge -- been studied before.