The Disastrous Game of Hurricane Harvey
https://theconversation.com/response-to-natural-disasters-like-harvey-could-be-helped-with-game-theory-83125
http://fortune.com/2017/09/03/hurricane-harvey-damages-cost/
In the wake of one of the most terrible disasters to hit America, nearly half a million people are expected to seek federal aid. Hurricane Harvey is predicted to cost roughly $180 billion. Tens of millions of dollars and being donated for relief to the hundreds of thousands of NGOs who come to the rescue for those who need it. However, there is an issue at hand. While these NGO’s all have the right idea of providing disaster relief, they are competing with one another for funding. And more importantly, they are competing with each other in providing the necessary supplies.
Anna Nagurney, the author of the article “Responses to Natural Disasters like Harvey Could Be Helped with Game Theory”, claims that these NGOs are not working as efficiently as they could be in delivering necessary supplies. They are oversupplying in some areas, and undersupplying in others. For example, in 2010, in Haiti, news outlets reported of insufficient water supplies, which quickly resulted in an influx of immense donations for water leading to a surplus. There was so much water being shipped in, that other supplies were put on halt for multiple days, resulting in shortages. Additionally, according the the article, 60% of the supplies being brought in to a disaster site are “non-priority items”, and much time and money is waisted because of this. The economics of disaster relief is challenged on the supply side by companies trying to maximize donations and ensure financial sustainability, while on the demand side by victims needing to receive necessary aid as quickly as possible.
The solution is in game theory. These companies need to do a better job of meeting the required quantities at each “demand point”, or necessary relief category, without oversupplying in a specific area, and without overlapping supplies with other NGOs or larger organizations like governments. The Nash Equilibrium here is minimizing the material convergence and congestions that comes from unnecessary supplies, while still providing all the necessary aid. Essentially option A is a company choosing to work by themselves, which would result in a lesser payoff due to the unmet necessities in some demand points and oversupply in others (which would further result in a delay in necessary supplies due to a limit in physical space and ability to ship and categorize supplies, like what happened in Haiti). Option B is the company choosing to collaborate with others, maximizing relief supplied, minimizing surpluses and unnecessary items (which would further maximize the efficiency of providing the relief due to minimal packaging backups). It is hard to put a value and quantify on the payoffs in each case in real terms, but logically, of course option B is the better.