Game theory in solving conflicts on local government level

Game theory is often used while making decisions in situations of conflicted interests. This research studies practical application of game theory with emphasis on applying linear programming, i.e. simplex algorithm while solving problems in game theory domain. Different cases of game theory application in various scientific disciplines went through theoretical analysis. After the analysis was conducted, this paper presented a practical example of solving a situation of conflict on local government level and the efficiency of game theory while making decision

Implication of game theory to international trade

Game Theory is a general mathematical analysis to investigate the strategic interactions among players. Game theorists attempt to provide precise descriptions of situations of conflicting interests in order to study the behavior that such a conflict would (or, in some cases, should) elicit from rational agents. Players are assumed to consider the position and perceptions of other players while forming their strategies. In our examples, we will assume that there are two players, and that each has two choices and the fact that the players are selfish (operate in their own best interests) and rational (choose the best options available). First, I outline some basic concepts of game theory and, in the next section, I give some examples regarding the application of game theory to international trade (cartel, free trade & protection and trade policies).Game Theory, cartel, trade policies

Continuous and Step-level Pay-off Functions in Public Good Games: A Conceptual Analysis

Conflicts between individuals’ and collective interests are ubiquitous in social life. Numerous experimental studies have investigated the resolution of such conflicts using public good games with either continuous or step-level payoff functions. A conceptual analysis using both classic game theory and social exchange theory shows that these two types of games are fundamentally different. A continuous function game is a social dilemma in that it contains a conflict between individual and collective interests whereas a step-level game is primarily a social coordination game. Thus, we conclude that one can not safely generalize results from step-level to continuous form games. Additionally, our analysis shows that the distinction between continuous and single-step games can be blurred by segmenting a continuous function into steps or adding steps to a single-step game. We identify characteristics of the payoff function that conceptually mark the transition from a dilemma to a coordination problem.

Schelling, von Neumann, and the Event that Didn’t Occur

Thomas Schelling was recognized by the Nobel Prize committee as a pioneer in the application of game theory and rational choice analysis to problems of politics and international relations. However, although he makes frequent references in his writings to this approach, his main explorations and insights depend upon and require acknowledgment of its limitations. One of his principal concerns was how a country could engage in successful deterrence. If the behavioral assumptions that commonly underpin game theory are taken seriously and applied consistently, however, nuclear adversaries are almost certain to engage in devastating conflict, as John von Neumann forcefully asserted. The history of the last half century falsified von Neumann’s prediction, and the “event that didn’t occur” formed the subject of Schelling’s Nobel lecture. The answer to the question “why?” is the central concern of this paper

Negotiation and Mediation in Conflicts I.: The Role of Mathematical Approaches and Methods

There are many possible approaches to the analysis of conflict situations and ways of developing mediation or negotiation procedures. In general, we can distinguish between socio-political approaches, procedures for mediation and negotiation which have developed historically through political experience, and systems-analytical, mathematical approaches, which rely on various branches of decision and game theory or on computerized simulation or gaming models. While the socio-political approaches must remain the basis of any analysis of conflict situations, they can usefully be supplemented by more-formalized approaches; both approaches, when used separately, have their limitations. This paper, after a short review of existing systems-analytical and mathematical approaches, proposes new concepts and methods for the mathematical analysis of conflict processes. The proposed approach attempts to bridge the gap between simulation gaming models and experiments and more formal game-theoretical analysis by taking certain ideas from interactive decision supported gaming, assuming that the players have multiple objectives that they wish to satisfice (not optimize), and introducing special mediation procedures as an element of decision support during the game. The mathematical concepts used are the selection of satisficing game equilibria, the definition of constructive and destructive behavior (on the part of the players), and a formalization of conflict escalation and de-escalation processes

The use of Game Theory to solve conflicts in the project management and construction industry

A typical construction project involves a wide range of disparate professionals, in many cases geographically distributed, working together for a relatively short period of time on the design and construction of a facility. Since organizations are becoming flatter, culturally rich, geographically diverse and intensely competitive, the possibilities for conflict in such environments are greater. Negotiation is an important aspect of a project and plays an important role in resolving claims, preventing disputes, and keeping a harmonious relationship between project participants. Part of any project manager’s role as a leader is to recognize conflict, understand the sources of conflict and manage it, and to do this a project manager must be able to understand the basics of negotiation theory and have sufficient competencies to lead in such situations. To address the complex technical and human issues in negotiation, different negotiation theories and models are available which mainly include game theory, economic theory, and behavior theory. Since Game Theory provides, by its very nature, the appropriate tools for the analysis and eventual solution of conflicts of any kind, this paper uses a model based on Game Theory in order to identify the activities that are responsible for the delays in a project and divide the costs among them

Linking Strategic Interaction and Bargaining Theory. The Harsanyi - Schelling Debate on the Axiom of Symmetry

This paper analyses the early contributions of John Harsanyi and Thomas C. Schelling to bargaining theory. In his work, Harsanyi (1956) draws Nash’s solution to two-person cooperative games from the bargaining model proposed by Zeuthen (1930). Whereas Schelling (1960) proposes a multi-faceted theory of conflict that, without dismissing the assumption of rational behaviour, points out some of its paradoxical consequences. Harsanyi and Schelling’s contrasting views on the axiom of symmetry, as postulated by Nash (1950), are then presented. The analysis of this debate illustrates that, although in the early 1960s two different approaches to link strategic interaction and bargaining theory were proposed, only Harsanyi’s insights were fully developed later. Lastly, the causes of this evolution are assessed.bargaining, game theory, symmetry

Supply chain collaboration

In the past, research in operations management focused on single-firm analysis. Its goal was to provide managers in practice with suitable tools to improve the performance of their firm by calculating optimal inventory quantities, among others. Nowadays, business decisions are dominated by the globalization of markets and increased competition among firms. Further, more and more products reach the customer through supply chains that are composed of independent firms. Following these trends, research in operations management has shifted its focus from single-firm analysis to multi-firm analysis, in particular to improving the efficiency and performance of supply chains under decentralized control. The main characteristics of such chains are that the firms in the chain are independent actors who try to optimize their individual objectives, and that the decisions taken by a firm do also affect the performance of the other parties in the supply chain. These interactions among firms’ decisions ask for alignment and coordination of actions. Therefore, game theory, the study of situations of cooperation or conflict among heterogenous actors, is very well suited to deal with these interactions. This has been recognized by researchers in the field, since there are an ever increasing number of papers that applies tools, methods and models from game theory to supply chain problems

Conflict Diamonds

’Conflict diamonds’ refers to the fatal role that diamonds are believed to have played in several African conflicts. The article analyzes the impact of diamond abundance on economic growth in light of the broader, previously discovered empirical finding of a ’curse of natural resources’. By extending the theory of appropriative conflict, a predator-prey game is outlined in which a rebel chooses between peaceful production and predation on natural resources controlled by the ruler. It is shown that whereas an increase in natural resources will increase the ruler’s public utility investments, it might also lead to a crowding-out of labor from the formal sector to the appropriative struggle, which depresses growth. As predicted by the model, a cross-country regression analysis suggests that diamond abundance has a negative relationship with economic growth in countries with weak institutions.diamonds, appropriative conflict, curse of natural resources, growth, predation.