GAME THEORY:
THE NIGERIAN PERSPECTIVE
It’s
good to be back. Well just concluded my Masters programme at the University of
First Choice. Let’s get down to business. Now we know for the past few years in
Nigeria, we have been experiencing series of industrial actions. I’ll like us
to consider the case of the face-off between the Federal Government (FG) and
the Academic Staff Union of Universities (ASUU) employing the concept of the
“Nash Equilibrium” (the prisoner’s dilemma is mostly used). In the Prisoner’s
dilemma, suspects (two for simplicity) are apprehended and interrogated;
efforts are made by their captors in eliciting information from both suspects.
The following situation holds:
- The players (prisoners) are separately interrogated;
- Both players are faced with a pre-determined sentence;
- There is no loyalty between the players;
- One player can snitch on the other to get lighter sentence to the detriment of the other;
- Both players can decide to remain silent and get the pre-determined sentence; and
- Both players can confess and get more than the pre-determined sentence
We’ll
try playing this game using the ASUU and FG as our players. They both have two strategies (yield to the
other’s demands or not yield). So let’s consider the available states and
outcome using the Pay-off matrix.
- FG yields and ASUU yields each getting 20 points
- FG yields in and ASUU doesn’t, FG gets 10 points ASUU goes with 30 points
- FG doesn’t yield and ASUU does, FG gets 30 points ASUU gets 10 points
- FG doesn’t yield; neither does ASUU, both get 15 points each.
Now let’s look at these
scenarios or states in the payoff matrix.
So, we can clearly see that it would be in the best interest if both parties yield to each other’s demands. There is however a point referred to as the global optimal state. This is a point we refer to as the Pareto optimal state. By this point we mean none of the players can change strategy without making the other worse off. These points are both scenarios (A) and (D).
However,
there exists a point we call Nash equilibrium (named after late Mathematician
from Princeton “John Nash”). As defined by John Nash “This is a stable state
that involves interacting participants of a system in which no participant can
gain by a change of strategy as long as the other participant remains
unchanged”. In the Nash state, a party has no incentive to change strategy
given the other players strategy remains unchanged. So if we look closely, we
can observe the following:
Point A: (i) Given FG’s position as fixed, ASUU have
a strong incentive to change strategy (not yield) by moving to B.
(ii) If ASUU’s position
is fixed, FG has a strong incentive to change strategy (not yield) by moving to
C. This is not Nash equilibrium since both players have incentives to change
strategy holding constant the move of the other.
Point B: (i) Given FG’s position as fixed, ASUU have
no incentive to change strategy (yield) by moving to A.
(ii) If ASUU’s position
is fixed, FG has a strong incentive to change strategy (not yield) by moving to
D. This is also not Nash equilibrium since one player has the incentive to
change strategy holding constant that of the other player
Point
C: (i) If FG’s position is fixed, ASUU has incentive to change strategy (yield)
by moving to D.
(ii) Given ASUU’s
position as fixed, FG has no incentive to change strategy (yield) This is also
not Nash equilibrium since one player has the incentive to change strategy
holding constant that of the other player
Point
D: (i) If FG’s position is fixed, ASUU has no incentive to change strategy
(yield) by moving to C.
(ii) If ASUU’s position
is fixed, FG has no incentive to change strategy (yield) in moving to B. This
is Nash equilibrium since neither player has the incentive to change strategy
holding constant the move of the other player.
