Suppose the players in the game are the governments of two large countries, the US and Japan. We imagine that each country's government must choose between two distinct trade policies, free trade and optimal tariffs. Each policy choice represents a game strategy. If the US chooses free trade then it imposes no tariffs on imports of goods A,B,C etc. If the US chooses optimal tariffs then it determines the optimal tariff in each import market and sets the tariff accordingly.
Japan is assumed to have the same set of policy choices available.
In the adjoining diagram, US strategies are represented by the two columns, Japan's strategies correspond to the two rows. The numbers represent the payoffs to the countries, measured as the level of national welfare realized in each country in each of the four possible scenarios. For example, if the US chooses a free trade policy, while Japan chooses to impose optimal tariffs then the payoffs are shown in the box. Japan's payoff is below the diagonal while the US payoff is above the diagonal. Thus, Japan gets 120 units of welfare while the US gets 70 units.