Matching pennies is the name for a simple example game used in game theory. It is the two strategy equivalent of Rock, Paper, Scissors. Matching pennies is used primarily to illustrate the concept of mixed strategies and a mixed strategy Nash equilibrium.
The game is played between two players, Player A and Player B. Each player has a penny and must secretly turn the penny to heads or tails. The players then reveal their choices simultaneously. If the pennies match (both heads or both tails) Player A keeps both pennies, so wins one from Player B (+1 for A, -1 for B). If the pennies do not match (one heads and one tails) Player B keeps both pennies, so receives one from Player A (-1 for A, +1 for B). This is an example of a zero-sum game, where one player's gain is exactly equal to the other player's loss.
The game can be written in a payoff matrix (pictured right). Each cell of the matrix shows the two players' payoffs, with Player A's payoffs listed first.
This game has no pure strategy Nash equilibrium since there is no pure strategy (heads or tails) that is a best response to a best response. In other words, there is no pair of pure strategies such that neither player would want to switch if told what the other would do. Instead, the unique Nash equilibrium of this game is in mixed strategies: each player chooses heads or tails with equal probability. In this way, each player makes the other indifferent between choosing heads or tails, so neither player has an incentive to try another strategy. The best response functions for mixed strategies are depicted on the figure 1 below:
The matching pennies game is mathematically equivalent to the games "Morra" or "odds and evens", where two players simultaneously display one or two fingers, with the winner determined by whether or not the number of fingers match. Again, the only strategy for these games to avoid being exploited is to play the equilibrium.
Of course, human players might not faithfully apply the equilibrium strategy, especially if matching pennies is played repeatedly. In a repeated game, if one is sufficiently adept at psychology, it may be possible to predict the opponent's move and choose accordingly, in the same manner as expert Rock, Paper, Scissors players. In this way, a positive expected payoff might be attainable, whereas against an opponent who plays the equilibrium, one's expected payoff is zero.
Nonetheless, statistical analysis of penalty kicks in soccer—a high-stakes real-world situation that closely resembles the matching pennies game—has shown that the decisions of kickers and goalies resemble a mixed strategy equilibrium.
Other articles related to "matching pennies":
... The game to the right is a variant of Matching Pennies ... Matching Pennies with a twist Guess heads up Guess tails up Grab penny Hide heads up -1, 1 0, 0 -1, 1 Hide tails up 0, 0 -1, 1 -1, 1 Player 1 (row player ... or tails up, exactly as in the original Matching Pennies game ...
Famous quotes containing the word pennies:
“There is probably not more than one hundred dollars in cash in circulation today. That is, if you were to call in all the bills and silver and gold in the country at noon tomorrow and pile them on the table, you would find that you had just about one hundred dollars, with perhaps several Canadian pennies and a few peppermint Life Savers.”
—Robert Benchley (18891945)