Top B.Com Colleges in Delhi NCR improvise within the framework of the academic curriculum to offer fresh and innovative insights on different disciplines. Game theory is one such topic that invites the attention of students from diverse disciplines such as mathematics, economics, commerce and management. While game theory is one of the hot tracks for research and higher studies in management and has found wide spread application in the domain of academic and business research, there is still ample scope to explore more about the subject. At Ishan Institute of Management & Technology one of the top B.Com Colleges in Delhi NCR the academicians move beyond the traditional examples of usage of game theory in business economics and business environment. Here are a few interesting fast facts on the same.
Game Theory and Mahabharata
It is very fascinating to note that the Mahabharata apart from being an epic of epic proportions and thus being a treatise on subjects of political science, philosophy and literature is probably the first ever treatise written on game theory. Many academicians from the Anglo-American school of economics are not very aware of the crystal clear applications of game theory that the Mahabharata has. To put things into perspective it shall be encouraging to note that the Mahabharata has brilliant expositions of different aspects of game theory. In fact the entire story of Mahabharata can be retold in the form of game theory centric rounds.
Asymmetry of Information: To Be or Not to Be is The Question
The background story of the Mahabharata notwithstanding the portion of the Mahabharata that is relevant to game theory is that of gambling. “Dyut Krida” in ancient Indian terminology refers to game of gamble and speculation. Perhaps it makes enormous good sense to assert that the evolution of non-cooperation between the two warring parties in the epic premises itself on the paradigm of speculation. The decision of the Pandavas to accept the invitation to a game of speculation was not an incorrect decision. In game theory centric terms it was not a well informed decision.
The asymmetry of information with regard to any transaction or game can have significant consequences for the game and in extreme cases drastically alter the very conclusion of the game as is seen in the case of the Mahabharata. In game theory terminology as also in actuarial sciences there is a widespread application and importance of the use of asymmetry of information. A well informed decision that takes into consideration both the costs and benefits of playing a game is the rational basis of a decision to play the game or not. As such there are ample examples of real life situations and business transactions where paucity of information for a single party or information surplus to another party may lead to the distortion of markets. As is evident from the Mahabharata it is the asymmetry of information that leads to decisive one sided outcomes in different rounds. The decision of the Pandavas to play the gamble, the decision of Kauravas to go to war, the decision to enter the Chakravyuha and even the killing of Karna by Pandavas are all examples of asymmetry of information at play. It makes great sense to reiterate the words of William Shakespeare:
“To be or not to be is the question.”
Moral Hazard and Adverse Selection
In many cases of real life and business we come across situations involving a definite lack of transparency. Asymmetry of information acts as a double-edged sword. It works in favour of the party having access to information surplus and works adversely against the party facing an information deficit. Intellectual property rights like product and process innovations that are safeguarded by copyrights, trademarks and patents are potential weapons of non-price competition used in business and politics. Moral hazard plays out in favour of the party that has access to secret knowledge resources like a new invention, new technology, more efficient plant, equipment and machinery and the likes. Adverse selection plays out against the party with lower access to information resulting in ill-informed decision making. The Mahabharata is replete with instances of both moral hazard and adverse selection whereby one party scores over the other by virtue of greater access to and better safeguarding of resources that have higher efficiency.
Games with Multiple Rounds: Cheating and Tit for Tat Strategy
The Mahabharata comes across as a game with multiple rounds. Assuming that the parties at war did not know the number of rounds of warfare required to achieve victory it may be referred to as a game with indefinite number of rounds. Again it may be said that in most business and real life situations games alter their nature from indefinite to definite ones as the partied proceed from one round to another. The debates on this aspect however do not eradicate the questions of incentives to cheat.
The most popular literature on the incentives to cheat in business & economy, politics and governance is The Evolution of Non-Cooperation by popular scientist W.D. Hamilton and economic theoretician Robert Axelrod. Yet it makes sense to suggest that the earliest exposition of cheating and tit for tat strategies as is used in oligopoly analysis to resolve the breakdown of cartels is found in the Mahabharata. The spontaneous and sporadic movement from one episode of murder to another one is premised on the breakdown of cartel on the lines of cheating and tit for tat strategies.
At Ishan Institute of Management & Technology, one of the top B.Com colleges in Greater Noida, Delhi NCR we have discussed case studies on the usage of game theory in the Mahabharata and business in the paper of business economics. We intend to take up the theme in greater detail by engaging in academic research on the same.