Game Theory for CNOs

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Game Theory for CNOs
WP5 meeting Paris, 28-29/06/2004,
toni.jarimo_at_vtt.fi
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Applicability of Game Theory

• The concepts of GT match those of CNOs
• GT CNO
• players ? organisations or people
• strategies ? actions or decisions
• utilities ? gain from participating a CNO
• Modelling decision-making of multiple
  interdependent decision-makers

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Possible Applications

• Cost, risk, and utility sharing
• Ex-ante utility sharing ? i.e. incentives
• Use as a negotiation framework
• Illustrate potential for joint gains
• Predict the players behaviour
• Identify and reduce possibilities for opportunism
  and cheating

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Example Case GSM base-station filter

• Filter manufacurer has outsourced moulding and
  coating of the filter body to two suppliers
• In case of defect, the suppliers used to blame
  each other for poor work
• Conditions were changed by making the moulder
  responsible also for the coating
• The moulder now has the incentive to control
  quality

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Example Case GSM base-station filter
Moulding of filter body
Coating of filter body
Filter manufacturer
Material flow
Original invoicing
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Limitations

• Danger of being drifted to suboptimal outcomes
• Could be captured by a super-player?
• Avoid solving for static equilibria business is
  not static
• Foreseeing / measuring utilities is difficult
• How to encourage the participants to
  truth-telling?
• How to find the true objectives of different
  parties?
• Information asymmetries, information value?

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Conclusion

• Game Theory is a general framework for studying
  situations with multiple decision-makers
• high level of abstraction allows the modelling of
  various cases
• helps see things from the other parties point of
  view