Truck and Barter: FC Got No Game; But Someone Else Does (UPDATED)

March 03, 2005

FC Got No Game; But Someone Else Does (UPDATED)

By Ian

Here's a shocker: turns out, no one in business really uses game theory, despite it's being taught to nearly every MBA candidate in the US. (I'm sure this will warm Kevin and Steve's hearts.)

Fast Company: First, we scoured the literature. We selected a relevant portfolio of 40 publications and submitted our queries. We tried again. And again. And we found . . . nothing . There were plenty of mentions of government spectrum auctions, and A Beautiful Mind came up hundreds of times. Not quite what we had in mind.
Perhaps, we thought, the media just doesn't get it. Undaunted, we assembled a panel of 30 respected game theorists around the world, and we sent them a survey asking, "Can you think of any examples of real, live companies that have consciously applied game-theoretical concepts to a real business problem?"

The response was . . . a deafening chorus of head scratching.

"The short answer is, I don't know," said David Levine of UCLA. "Let me think about this," replied MIT's Muhamet Yildiz.

Not to be too snarky, but having been in a few classes with MBA candidates at UChicago...I'm not sure they do much with the economics they were taught either.

UPDATE: Turns out, Fast Company did find someone who may be putting game theory to good use. Though, he might not really know it: Shaq.

Game Theorists Say... "There must ... be a credible commitment on the side of the relational monitor to the prescribed function in each contingency."
Shaq Says...
"It's about honesty ... I'm like toilet paper, Pampers and toothpaste. I'm definitely proven to be effective."

Hmmm. Perhaps it's not that people actually be knowingly applying game-theoretic strategies, but simply act as if they were?

Posted at March 3, 2005 05:05 PM

Comments

Well, it may be true that nobody uses formal game theory in business, but that doesn't mean it isn't put into practice all the time. Example: a store policy of meeting any competitor's advertised price, as a way of trying to get more business without starting a price war.

Comment by Nathan at March 3, 2005 07:08 PM | Permalink