Blogs from an Executive MBA: Game theory and the workplace

We Are All Wonder Women Co-founder Eugenie is currently undertaking an Executive MBA at the University of Cambridge. This is one is a series of blogs she is writing giving insight into some of her learning from the course which she hopes will help other Wonder Women at work.

My 11-year old son was delighted when I came home from an MBA lecture to tell him that gaming is an important part of decision-making. I was surprised myself that this is a useful approach for work and something that should be used for often.

Here is a simple game that shows the basic principles of game theory. There are two players, Player 1 and Player 2. Player 1 goes first and can choose Up or Down. Player 2 plays next and can choose Left or Right. Each player is aiming for the highest payoff for themselves. In which quadrant will they end up?
​
If Player 1 chooses Up - then Player 2 will choose Right because Player 2 will choose 3 (their payoff if they choose Right) instead of 2 (their payoff if they choose Left) - which leaves Player 1 with 0. So Player 1 will choose Down, Player 2 will choose Right (a payoff of 1 instead of 0) - and the answer to this game is bottom right. With both players ending up with a payoff of 1.

Image: University of Cambridge

Game theory obviously becomes much more complex than this but the basic principles are the same. There is a situation where two parties are looking to get the best outcomes for themselves. One person makes the first move and they want to know which moves their competitor will make over time in response to their subsequent moves. Just like chess.
So the next time you are faced with a set of decisions around working with or competing against another organisation, colleague, etc. consider what impact your decision will have on their decision, and then what their decision will have on your next decision, and so on and so worth. It will make you a better game player!

Did you know we offer a range of services to help professional women in the world of work? Just click here to find out more.