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.