Industrial Engineering & Management

Using Game Theory to Develop Sustainability Strategies in an Era of Resource Depletion

Abstract

Shahla Seifi and David Crowther

Objective: Sustainability is recognized as an important objective in business planning and is of equal relevance to policy makers. It is equally accepted, almost universally, that the resources of the planet are finite and are being over consumed on an annual basis. The prognosis therefore is that resources are being depleted and competition for access to remaining resources must ensue, as countries seek to grow and develop. This will have the effect of increasing the transaction costs of business activity as they find greater difficulty in seeking restricted supply of resources. This poses a problem for future economic activity and therefore for the achievement of sustainability. This is compounded by the fact that individual sustainability for countries or companies does not equate to global sustainability.
Method: At the same time Game Theory is recognized as a key strategic tool by policy makers and by business decision makers and is used extensively for scenario planning and strategic decision making. Although it has been recognized that Game Theory has relevance to addressing the problems of manufacturing due to resource depletion, it is surprising that no work has been done in this area. This paper therefore explains the role which this theory can play in developing strategy, and thereby promoting sustainability.
Results: It does so by developing a model which can be used in demonstrating the efficacy of planning scenarios developed in this way. For this the Prisoners Dilemma version of Game Theory is used and extended. The resulting model is then discussed and the results evaluated. Further however it recognizes the resultant problems which further need to be solved.
Conclusion: It concludes by discussing the resulting problems to propose a solution and way forward but also argues that further work is needed in order to promote sustainability and make it realistic in a global context.