Timing in Game Theory Strategies
In the article “How Random Tweaks in Timing can Lead to New Game Theory Strategies”, economist Justin Grana of RAND Corporation, physicist David Wolpert of SFI, and economist James Bono examined the effect of timing in game theory. In standard game theory models players would have an equal amount of information and act upon it simultaneously. However, the timing of information can create more randomness and uncertainty, which can be advantageous or disadvantageous to the decision making process. They exemplified this by examining two gas stations, which are right next to each other. They can either lower the prices till they reach break even point to attract the overall customers or they can choose to both have high prices and split the customers. At first, there could potentially be a Nash equilibrium between the two gas station in order to have mutual benefits. However, as the game continues, the player who has a faster timing in getting new information about the demand would be able to change the equilibrium point. This could lead to the other player to be completely out of the game or changes in the equilibrium point, usually benefiting the player who has more information. Grana concluded that “small tweaks in timing can make a big difference in decision-making.”
In class, we have always examined examples of game theories in a perfect case, however, when game theory is actually applied to real world cases, there can be a lot of influential factors. When we look at game theories in diagrams, we would assume that the players are in a fair game. Informational networks play a big role in any kind of market, especially with social media being so widely used currently, this highly increases the spread of information and can be a big twist in different types of markets. I anticipate to learn more about the limiting and influential factors that play a big part in game theory in class or through news articles.
https://www.sciencedaily.com/releases/2019/07/190724131618.htm