Encyclopedia of Operations Research and Management Science

2013 Edition
| Editors: Saul I. Gass, Michael C. Fu

Payoff Function

Reference work entry
DOI: https://doi.org/10.1007/978-1-4419-1153-7_200584

In a game, the mapping from the players’ strategies (decisions, actions) to the gains and losses they receive. In a two-person finite action game, the payoff function is often depicted in the form of a matrix, with a single number for each matrix element in a zero-sum game.

In financial engineering, the mapping from the underlying asset(s) to the payout of a contingent claim or financial derivative.


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© Springer Science+Business Media New York 2013