Game Theoretic Approach Research Articles

A Game-Theoretic Approach to Two-Person Negotiation Under Multiple Criteria

A Game-Theoretic Approach to Two-Person Negotiation Under Multiple Criteria

Agent-Based Management and Coordination of Aircraft at Intersections

This work presents a game-theoretic approach to address the problem of coordination and scheduling of aircraft at intersections, with the goal of avoiding conflicts and potential collisions. The proposed algorithm enables simple agents to work together in a way that leads to cooperative behaviors, resulting in equilibria that improve the overall efficiency of the system. The researchers tested and compared the game-theoretic approach with a centralized approach, specifically FirstCome-First-Serve (FCFS), using data from Mohammed 5 Casablanca airport. The initial results suggest that the game-theoretic model is promising, despite its higher complexity. The approach has the potential to improve the overall coordination and scheduling of aircraft, leading to a more efficient and safe system. The proposed game-theoretic approach is designed to improve the coordination and scheduling of aircraft at intersections, ultimately leading to a safer and more efficient system. The approach is shown to be promising in initial testing, offering a potentially superior alternative to centralized approaches like FCFS. This research highlights the potential benefits of game-theoretic models in addressing complex coordination problems in multi-agent systems.

A game theoretic approach to contract-based enviro-economic coordination of wood pellet supply chains for bioenergy production

Wood pellets have gained global attention due to their economic availability and increasing demand for bioenergy as part of sustainable energy solutions. Management of the wood pellet supply chains, from feedstock harvesting to bioenergy conversion, is critical to ensure competitiveness in the energy markets. In this regard, wood pellets supply chain coordination can play a strategic role in enhancing the efficiency and reliability of bioenergy generation. This study proposes a contract-based coordination mechanism for wood pellet supply chains and compares its performance in alternative centralized and decentralized decision-making structures. A bi-level nonlinear game-theoretic approach with two economic and environmental objective functions is developed. It utilizes the concept of life cycle assessment in a Stackelberg leader–follower game to obtain the bioenergy equilibrium solutions. Further, this study examines the case of wood pellet supply chains in three remote Canadian communities. The aim is to showcase the practicality and significance of the proposed approach and interpret the findings. By focusing on these communities, the crucial role of supply chain coordination in fostering sustainable development, particularly, in the context of bioenergy generation is emphasized. The study colludes by advocating a number of avenues for future research.

Deception as Mimicry

AbstractWhat is the nature of deception? What does it take for an organism to deceive another one? In this article we address these questions by appealing to the concept of mimicry. More precisely, we argue that a fruitful perspective regards deception as an instance of mimicry rather than the reverse. Conceiving of deception as an instance of mimicry has a number of interesting consequences: It draws connections between different areas of research, vindicates a functional approach to deception by providing a satisfactory answer to some recent objections, and suggests some worries for game-theoretic approaches to deception.

A game-theoretic approach of cyberattack resilient constraint-following control for cyber–physical systems

Cyber–physical systems (CPSs) integrate network and physical components. The relevant network security issues have been receiving consistent attention. This paper considers cyber–physical systems whose control resilience is characterized by uncertainty, mechanical motion constraints, and exposure to cyber-attacks. To address these problems, this paper proposes a game-theoretic method based on constraint following theory where the moving trajectory requirements are considered as constraints. There can be adversary network environment which may launch cyberattacks and even deny providing service. With a creative control design, it is validated that the controlled system is resilient to cyberattack disturbance and other spoofing or mixed threat attacks. Three game rules, one non-cooperative game and two Stackelberg competitions, are adopted in this study to obtain the optimal control design parameter choice. It is proven that the optimal choice is the same from the three rules, thus making this optimal choice generic (i.e., nonspecific) and important. The superiority of the optimal control design parameter is demonstrated in simulations.

Game-theoretic approach to understanding status transition dynamics and employee performance enhancement in organizations

To foster high-quality economic development, it is critical to not only enhance the “hard environment,” such as infrastructure, but also to make significant strides in the “soft environment,” such as the relationship between government and businesses. This study posits that the government, industry associations, and enterprises should collectively participate in fostering a “cordial and clean” government-business relationship. By resolving the equilibrium solution of the three-party game, it has been identified that achieving the goal of constructing a cordial and clean government-business relationship and aligning with the ambitions of enterprises necessitates policy guidance and a balance of interests among the government, industry associations, and enterprises. The research also contributes to the beneficial exploration of game theory, by constructing a network model from the perspective of public management and integrating it with the practice of local administrative reform. This integration is particularly relevant for industry associations, and their systematic analysis further enhances the practical applicability of the research.

Impact of voluntary testing on infectious disease epidemiology: A game theoretic approach.

The World Health Organization recommends test-and-treat interventions to curb and even eliminate epidemics of HIV, viral hepatitis, and sexually transmitted infections (e.g., chlamydia, gonorrhea, syphilis and trichomoniasis). Epidemic models show these goals are achievable, provided the participation of individuals in test-and-treat interventions is sufficiently high. We combine epidemic models and game theoretic models to describe individual's decisions to get tested for infectious diseases within certain epidemiological contexts, and, implicitly, their voluntary participation to test-and-treat interventions. We develop three hybrid models, to discuss interventions against HIV, HCV, and sexually transmitted infections, and the potential behavioral response from the target population. Our findings are similar across diseases. Particularly, individuals use three distinct behavioral patterns relative to testing, based on their perceived costs for testing, besides the payoff for discovering their disease status. Firstly, if the cost of testing is too high, then individuals refrain from voluntary testing and get tested only if they are symptomatic. Secondly, if the cost is moderate, some individuals will test voluntarily, starting treatment if needed. Hence, the spread of the disease declines and the disease epidemiology is mitigated. Thirdly, the most beneficial testing behavior takes place as individuals perceive a per-test payoff that surpasses a certain threshold, every time they get tested. Consequently, individuals achieve high voluntary testing rates, which may result in the elimination of the epidemic, albeit on temporary basis. Trials and studies have attained different levels of participation and testing rates. To increase testing rates, they should provide each eligible individual with a payoff, above a given threshold, each time the individual tests voluntarily.

A Stackelberg game-based dynamic pricing and robust optimization strategy for microgrid operations

Energy management algorithms of microgrids have attracted growing attention for the efficient operation and coordination of active end-users. In developing these algorithms, leader–follower game approaches could provide effective strategies when the behavioral and operational characteristics of active end-users are integrated into the methodology. However, since these approaches require the exact implementation of the strategy determined by the leader, it is of great importance to deal with the uncertainty of renewable energy generation, charging/discharging energy of storage systems, and load consumption. Thus, possible negative effects of these uncertainties on the outcome can be minimized with an appropriate billing procedure. In this paper, a Stackelberg game approach is proposed for the energy sharing management of a microgrid including prosumers and plug-in electric vehicle (PEV) charging stations (CSs), and a proper billing scheme is designed to increase the robustness of the approach on real-time applications. In the hereby game-theoretic approach, the energy demands of PEV CSs are determined as variable demands considering the operational characteristics of CSs. The energy planning of CSs is based on determining the number of PEVs that each station can accept over the vehicle charging levels for a specified time interval. Also, by the necessary modifications identified for the presented approach, the microgrid can operate independently from the utility grid and satisfy the requirements of islanded mode for the time slots in which the microgrid exchanges energy with the grid based on the end-game results. The energy management strategy proposed in this study presents a comprehensive solution capable of optimizing energy sharing in microgrids while taking into account end-users’ operational characteristics and network requirements. Furthermore, the designed billing scheme ensures that the accuracy of the proposed game approach remains unaffected by the uncertainties, thus preserving the microgrid’s profit.

Alliance formation between a platform retailer and competing manufacturers in sharing consumer data for product development

This study investigates an alliance formation between competing manufacturers and a monopolistic platform retailer, where consumer data collected by the retailer are available between all the alliance members to utilize for the development of their products. The manufacturers alternatively choose to adopt the direct-to-consumer model, where they collect and utilize own consumer data or sell products without data utilization. They are differentiated from each other in varying degree of substitutability. Under the alliance, the effectiveness of utilizing their rival’s consumer data is proportional to the degree of substitutability. By using a game-theoretic approach, we analyze a strategic interaction between two or three manufacturers and the retailer to derive the condition under which the alliance is successfully formed in equilibrium and to discuss the retailer’s profitability of the alliance formation.We show that participation in the alliance has a direct effect of sharing their rivals’ consumer data and an indirect effect of mitigating price competition between the manufacturers due to the “free-riding” effect of data sharing. Despite these merits, the alliance may not be formed in equilibrium. When the two manufacturers are differentiated to some extent or the three manufacturers are symmetrically differentiated, the alliance is successfully formed. Otherwise, it is never formed in equilibrium. We show that the retailer benefits the most from the alliance with two intermediately differentiated manufacturers and that an increase in the number of manufacturers participating in the alliance does not necessarily improve the retailer’s profitability.

Product Sustainability and Consumer Environmental Awareness in Differentiated Markets

Sustainable management of natural stock resources can be promoted through state intervention. This study investigates optimal regulatory strategies to mitigate the negative environmental effects of human activities within a duopolistic, differentiated linear market à la Hotelling framework. The analysis is conducted from both a business and a social perspective, aiming to elucidate the role of regulatory interventions, awareness campaigns, and sustainable production characteristics in shaping firm behavior and market outcomes. Under the business perspective, a game-theoretical approach is employed, involving the regulator and two competing firms. The equilibrium in prices and production characteristics is derived, revealing how firms respond to sustainable characteristics and awareness campaigns. In the social perspective, where the regulator has complete control, optimal strategies are determined to maximize social welfare, resulting in reduced differentiation and enhanced sustainability. This study identifies the optimal level of awareness campaign and sustainable characteristic proposed by the regulator. The findings highlight the significance of coordinated regulatory policies and awareness campaigns to induce firms toward more sustainable practices, ultimately contributing to a more ecologically balanced market. The study offers insights for policymakers and practitioners seeking effective strategies to address environmental concerns in differentiated markets, thereby promoting sustainable economic growth and reducing ecological impacts.

A Game-Theoretic Approach on Conflict Resolution of Autonomous Vehicles at Unsignalized Intersections

In order to resolve the driving conflict and improve the safety and efficiency of autonomous vehicles at unsignalized intersections, a new decision-making method based on game theory with personalized driving preferences considered is proposed in this paper. In the decision-making method, the alterable game mode is constructed by combing the designed game entrying mechanism and replanning of game sequential order under different intersection conditions to ensure the adaptiveness and effectiveness of the decision-making algorithm. Besides, four payoff indicators and personalized payoff function are designed with the consideration of driving efficiency, safety and comfort requirement. The advantage of proposed method is that it not only reduces the complexity of game mode and improves the effectiveness at the same time, but also fully considers the personalized driving preferences to realize human-like driving and personalized decision while the existing methods usually neglect the difference among the drivers and its influence. Five different typical scenarios at the unsignalized intersection are given under co-simulation environment of Matlab and Prescan. The results show that the proposed decision-making method is able to resolve the driving conflict and ensure the safe passage of autonomous vehicles at unsignalized intersections, which verifies the effectiveness of the proposed method.

Shaping sustainable strategies of freight forwarding companies in the environment of the road transport market

Purpose. The paper aims to propose an approach to shape the sustainable strategies of freight forwarders under uncertainty of the stochastic environment of the transportation market. Methodology. The elements of the game theory were used to formalize the conflict situation, where the uncertainty of the transport market is considered as a game with nature. To design the model of the freight transportation market, the principles of the system’s theory were used in the representation of a forwarding company operating as an element within the macro-logistic system of the transport market. The methods of object-oriented programming were applied to develop the dedicated software for computer simulations of the forwarder’s operation within the market of transport services. The regression analysis was used as the main methodology to process the numeric results of experimental studies. The elements of functional analysis were applied to substantiate the sustainable strategy of a forwarding company in the considered example. Findings. The results of the conducted experiment allowed for determining the high-quality dependencies between the number of serviced requests and the number of dispatchers involved in the requests’ servicing for the case when the operators’ decisions are supported by the specialized software and for the case when decisions are made conventionally. Originality. The use of a game-theoretical approach in this study is based on the advanced simulations of a freight servicing process where the demand randomness and the servicing process stochasticity are integrally considered. Practical value. The proposed methodological approach is proposed to be used by forwarding companies to evaluate sustainable strategies when servicing clients within the given market. The use of the developed approach in practice allows forwarders to decrease the operational costs achieving the minimal negative impact on the environment.

Coordinated design of multi-stakeholder community energy systems and shared energy storage under uncertain supply and demand: A game theoretical approach

Shared energy storage plays an important role in achieving sustainable development of renewable-based community energy systems. In practice, the independent or disordered planning of community energy systems and shared storage systems can lead to suboptimal design without considering the complex interactions between neighboring energy systems. Therefore, a coordinated design approach for community energy systems and shared energy storage is proposed, and a pricing mechanism for storage sharing based on bounded rationality theory is developed. A Stackelberg game is introduced to enable consideration of storage sharing among energy systems at the design phase. The uncertainties of solar irradiation, wind speed, and electrical demand on both the supply and demand sides are also considered. Then, an uncertainty model is formed to optimize the system configurations, operation strategies, and storage sharing strategies of each stakeholder, simultaneously. Furthermore, the influence of the profit margin, storage investment cost, and carbon tax on the storage rental price and system design strategies are discussed. Illustrative examples highlight the feasibility and applicability of the shared storage pricing mechanism and coordinated design approach. This paper provides references for the government with respect to the problem of coordinated design for multi-stakeholder distributed energy systems and storages in a market-oriented environment.

A Study on Blockchain Sandwich Attack Strategies Based on Mechanism Design Game Theory

The rapid progression of Decentralized Finance (DeFi) has established Decentralized Exchanges (DEX) as critical elements in the financial landscape. Nevertheless, the open and transparent nature of DEX makes them susceptible to strategic manipulations, especially the sandwich attack. During such maneuvers, ill-intentioned actors exploit price slippage by positioning their transactions strategically around a target’s order to reap unfair profits. This paper introduces a ground-breaking framework rooted in mechanism design game theory to lessen the impact of sandwich attacks. The framework delineates the precise strategy of the sandwich attack and its repercussions, shedding light on the tactical aspects and utility functions pertinent to both the attackers and the ordinary traders, subsequently referred to as workers. The discussion extends to defining utility functions for both the market and the workers, emphasizing the benefits of liquidity provision for the market and the potential profits and losses for the workers. The proposal encourages adopting a market-centric mechanism design grounded in game theory, wherein the market, operating as the designer, creates rules to maximize its utility while considering the workers’ utility. Through a meticulous analysis of this game-theoretic approach, the study identifies optimum strategies for all the involved parties, demonstrating that these strategies can reach a balanced state. Further, this study presents a comparative view against existing research, highlighting the limitations of contemporary solutions and asserting the effectiveness of the proposed model in protecting the interests of both the market and the workers. Ultimately, this research furnishes stakeholders with new perspectives and instruments to thwart sandwich attacks and lays a foundation for creating resilient and fair decentralized trading infrastructures.

Supply Risk Mitigation in a Decentralized Supply Chain: Pricing Postponement or Payment Postponement?

Problem definition: In a multistage model of a bilateral supply chain, we study two postponement strategies that the downstream retailer may adopt to mitigate the supply yield risk originating from the upstream production process. The retailer could either postpone the procurement payment until after the yield is realized and pay only for the delivered amount; postpone the pricing decision to better utilize the available supply; or do both. Although both strategies have been separately studied in literature, there is little research on their combined effect and system-wide implications in a decentralized setting. Methodology/results: Taking a game-theoretic approach, we formulate a Stackelberg game and solve for the equilibrium in four scenarios, respectively, in which the retailer uses different combinations of the postponement strategies. There are three main findings. First, when the production cost is low and the yield loss is highly likely, the retailer never strictly benefits from either postponement strategy; with relatively high production cost, the retailer is more likely to adopt payment, rather than pricing, postponement. Second, we uncover a situation where postponing payment and postponing pricing are strategic complements for the retailer. That is, the use of one strategy may increase the benefit of using the other. Third, we identify conditions under which the postponement strategies can be Pareto optimal to the entire supply chain, making the firms’ profits and the consumer surplus simultaneously higher. Managerial implications: These results can be applied in many practical settings to provide guidance for firms to better design the procurement contract and properly use marketing instrument (pricing) to effectively mitigate supply risk and increase profit. Funding: G. Xiao acknowledges financial support from the Research Grants Council of Hong Kong [General Research Fund Grant PolyU 15503920]. X. Guo acknowledges the support from the National Natural Science Foundation of China [Grant 72293564/72293560]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0198 .

Pricing and bundling strategies for complementary products in a closed-loop green supply chain under manufacturers’ different behaviors

This study attempts to incorporate product complementarity and bundling strategy with green innovation and remanufacturing in a two-stage supply chain. For doing so, it considers a green closed-loop supply chain that combines two manufacturers and a typical retailer to deal with complementary products. Based on the manufacturer-led Stackelberg game-theoretic approach, it first develops two models considering the bundling strategies of the retailer. Each of these two models again establishes three sub-models under consideration of whether the manufacturers make their decisions jointly or simultaneously or sequentially. The optimal responses and the profitability under various models are compared both analytically and numerically to get some insights. The results exhibit that (a) regardless of different bundling strategies, the sequential decision-making scenario is beneficial for the leading manufacturer while the joint decision-making scenario is profitable for another manufacturer, the retailer, and the entire supply chain, (b) no bundling strategy is preferable in a green-sensitive market, even though it gives less profit to channel individuals, (c) in the Stackelberg scenario, the decision of which of two manufacturers will profit more depends on product complementarity and the residual values obtained from end-of-used products acquisition and their handling, and (d) the level of product complementarity and bundle price discount play important role in determining the appropriate bundling strategy.

Corporate social responsibility and network externalities: a game-theoretic approach

This research revisits the pioneering work by Katz and Shapiro (Am Econom Rev 75:424–440, 1985) with network (consumption) externalities in a twofold way: first, it considers Corporate Socially Responsible (CSR), instead of profit-maximising, firms; second, it uses a game-theoretic approach and analyses the commitment decision game in which firms face the binary choice to credibly commit (C\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$$C$$\\end{document}) or not to commit (NC\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$$NC$$\\end{document}) themselves to an announced output level in the first decision-making stage. Competition at the market stage occurs à la Cournot. Results show a rich spectrum of sub-game perfect Nash equilibrium (SPNE) outcomes, ranging from the prisoner’s dilemma (self-interest and mutual benefit of output commitment conflict) to the anti-prisoner’s dilemma or deadlock (self-interest and mutual benefit of output commitment do not conflict), passing from the coordination to the anti-coordination game. These outcomes depend on the intensity of the social concern in the firm’s objective and the network size. The article also pinpoints the welfare outcomes corresponding to the SPNE and extends the analysis to a Stackelberg rivalry setting.

Game-Theoretic Decision-Making and Payoff Design for UAV Collision Avoidance in a Three-Dimensional Airspace

Safety and efficiency are primary goals of air traffic management. With the integration of unmanned aerial vehicles (UAVs) into the airspace, UAV traffic management (UTM) has attracted significant interest in the research community to maintain the capacity of three-dimensional (3D) airspace, provide information, and avoid collisions. We propose a new decision-making architecture for UAVs to avoid collision by formulating the problem into a multi-agent game in a 3D airspace. In the proposed game-theoretic approach, the Ego UAV plays a repeated two-player normal-form game, and the payoff functions are designed to capture both the safety and efficiency of feasible actions. An optimal decision in the form of Nash equilibrium (NE) is obtained. Simulation studies are conducted to demonstrate the performance of the proposed game-theoretic collision avoidance approach in several representative multi-UAV scenarios.

A game-theoretic approach to designing carbon regulations in a duopoly freight transportation market: Road and multimodal road-rail competitive systems.

Since the transportation industry produces remarkable carbon emissions worldwide, governments aim to curb these emissions by implementing different carbon regulations. However, little is known regarding how the heterogeneity of transportation systems should be exploited to design carbon regulations. To fill this research gap, the present article formulates carbon cap-and-trade and carbon offset regulations to reduce total carbon emissions produced by road and multimodal road-rail freight transportation systems (FTSs) in a duopoly market; the latter is regarded as a green, energy-efficient transportation mode. A novel procedure is suggested to allocate initial carbon caps that is a hybrid of both benchmark and grandfathering methods. The procedure allows the government to exploit the energy efficiency of the multimodal system, when targeting a reduction of total carbon. Then, a game-theoretic approach is adopted to implement the mentioned carbon regulations. A government, as a Stackelberg leader, maximizes a social welfare function containing economic, social, and environmental dimensions. Under the cap-and-trade regulation, a Nash bargaining process is proposed to trade carbon permits between the FTSs, as the followers, for updating their initial caps. The equilibrium outputs of the two mentioned carbon regulations and a carbon tax regulation are compared. The findings based on an experimental analysis suggest that the cap-and-trade (carbon offset) is the optimal and energy-efficient regulation from the social (economic or environmental) perspective. In terms of policy implications, our findings indicate that the development of a marketplace infrastructure for trading carbon permits is not justifiable under theeconomic and environmental perspectives of the government.

A Game Theoretic Approach to Collaboration in Policy Coordination

Public policies are courses of action by a government in response to public problems in the real world with the aim of meeting the needs of society. Such policies must be coordinated to avoid inefficiencies. Most attempts to model public policy coordination are qualitative and, therefore, do not yield precise conclusions. More accurate modelling attempts are found in game theory, but they are not entirely appropriate as models of policy coordination, because policy coordination involves a high degree of collaboration. There is only one game-theoretic model of collaboration, and it does not model public policy coordination. The aim of this article is to show that a collaboration-based game theory model is not only feasible, but also more realistic than current game theory models of policy coordination. This was performed by adapting Newton’s seminal model to a society capable of formulating and coordinating policies. When this adapted game was compared to alternative games used to explain policy coordination, it was found that the adapted game made more realistic assumptions, the modelling process was simpler, and it can be applied to a broader range of contexts. By demonstrating that the adapted model offers a feasible theoretical foundation for the modelling of policy coordination, this paper provides a starting point for future modelling efforts in this area.