Game Theory and the 2011 NBA Lockout
Back in 2011, the NBA was involved in a lockout, a time in which the player’s union and the owners were unable to come to a deal on how to divide money. The issue resulted from a disagreement on how to divide nearly 4 billion dollars. Players felt they deserved to be payed more while owners were obviously against that option.
This game is very similar to the common case of the Prisoner’s Dilemma. Each side has 2 options, compromise or don’t compromise. If both compromise, they split the money 50-50. Easy enough, right? If neither compromise they both suffer huge losses. If one compromises and the other doesn’t then the uncompromising side earns more money than the one to compromise.
During the beginning of the negotiations there was almost nothing at stake due to the small amount of revenue lost. As the lockout approached the new year however they were beginning to toe the line of losing a complete season, a huge amount of revenue for both sides. At this point with a huge problem looming, both sides will be more likely to compromise to avoid catastrophic issues. Now we can see that the lockout ended December 8th, 2011 as both sides approached much larger consequences than a single week of lost revenue.
Source:
http://espn.go.com/nba/story/_/page/lockout-111013/how-prisoner-dilemma-relates-nba-lockout