Game Theory Applied to a Strike
French pilots are currently on strike and it is causing major losses for the Air France airline. The strike has been going on for 13 days. The pilots are on strike against Air France’s efforts to increase its budget airline Transavia in order to take customers from rival airlines Ryanair and EasyJet. The pilots want the same pay and benefits for all Air France pilots. The article says negotiations collapsed on Saturday resulting in the grounding of 55% percent of flights.
The article has a strong correlation to game theory. In game theory examples we have done in class, there have been two parties and each party had two options resulting in a payoff. The two parties are Air France and the pilots. In this case, the Airline is choosing to stand its ground, not agreeing to give the same pay and benefits to all of their pilots. This is resulting in a $25 million loss a day for Air France and the grounding of 55% of their flights. However, they have a chance they will not have to pay all of their pilots more. Their other option would be to agree to the pilots’ requests and return to regularly scheduled operations, losing some money by paying all the pilots the same amount.
The pilots currently on strike also have two options. The first option is to continue the strike, make no money, but have a chance to receive higher pay. The second option is the pilots can return to work, forfeit the chance to make more money, and receive the same pay as before. From these options for the two corresponding parties you can create a payoff matrix and determine the best strategy for each party.
Website Link: http://www.huffingtonpost.com/2014/09/27/air-france-cancellations_n_5893378.html?utm_hp_ref=mostpopular