Question

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Using the Topic Material "Game Theory," discuss your perspective on the use of game theory. How do "Nash equilibrium" and the idea of one "player" impacting another "player" within an organization affect the economic decisions and growth of an organization?

The use of Game Theory happens continuously throughout our daily lives, as we make decisions. Anytime we make a decision that affects another player (person or group), this is Game Theory in play. The essence of a game is the interdependence of player strategies. There are two distinct types of strategic interdependence: sequential and simultaneous. In the former, the players move in sequence, each aware of the others’ previous actions. In the latter the players act at the same time, each ignorant of the others’ actions (Dixit & Nalebuff, n.d., para. 4). With the Nash Equilibrium, the players look for a set of choices, one for each player, such that each person’s strategy is best for him when all others are playing their stipulated best strategies. In other words, each picks his best response to what the others do.

Within an organization, there are many players and games happening simultaneously. I work in a small rural hospital, our ED only has 13 beds. Our inpatient unit holds 25 patients, and we have six Family birthing rooms. We all work together between our units when we are busy helping the throughput of patients. Typically, the ED is the busiest unit, and we utilize staff from other departments when we “flex.” The players in this game are the different units, ED and the other unit that has a potential staff member to lend. The ED wins if we get that staff member, and the floor loses. If the staff member keeps the employee, the ED loses and the floor wins.

This “game” affects more than the unit that wins or loses. If the ED does not get an extra staff member in the time of flex, our wait time increases, patient satisfaction decreases, and potential safety concerns are elevated due to patient acuity and safe staffing. If the floor wins and keeps its staff members, they have high satisfaction rates, adequate staffing ratios and potentially safer care for their patients. This is well known in our facility, and since we are so small, compared to many other hospitals, we all work together to ensure the best care for our patients. To ensure we continue to work this way between different units, I have seen the rules recommended in our text at play in this repeated game; Be nice, be easily provoked, be forgiving, don’t be envious and be clear (Froeb, McCann, Shor, & Ward, 2016, p. 200). When we follow these rules, it works much better for everyone, even though there is a “loser” in each play of the game because we are all working toward the same collective goal.

Answer 1

Answer:

*Game theory is the theoretical framework wherein the strategic interaction is simulated in mathematical model to enable decision makers take decisions in social situations thus competing the other player(s). The factors like conflict and cooperation is analyzed and studied among individuals, organizations and government. Game theory is useful to understand why an individual makes a decision and how that decision might affect others. I strongly recommend game theory in a social situation because it helps the individual to take better decisions. In other words, the individual first considers the consequences of how his/her decision might affect others and considers the opponent’s decision when making decisions. This is a strategic game.

*Nash Equilibrium is a concept in game theory wherein it is a stable state where the player gets no benefit by changing his strategy and assuming the opponent too is not changing the game. It is widely used in a non-cooperative situation. In other words, the player chooses the strategy those best suits his/her interest. This leads to conflict and a non-cooperative situation. This affects the economic decisions because the social cause is not achieved instead each one thrive on their own personal benefit.

*In an organization, the employees take decisions/strategies that best suit them. However, the organization or the management needs to take decisions such as bonus and compensation based on the employees’ contribution. This affects the growth of the organization because the employees work to achieve their personal goals and the organization aim at long-term profits and revenue.

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