Stephen Miles, Founder and Chief Executive Officer of The Miles Group.
In the film A Beautiful Mind, Russell Crowe plays game theory pioneer John Nash. One scene from the film succinctly captures the essence of game theory and its implications for decision making. In the scene, Nash and his classmates are together in a bar when a group of five young women walk in—one blonde and four brunettes. The group—and particularly the blonde—quickly attracts the attention of Nash and his friends. Immediately, each classmate begins to plot his next move to win over the blonde.
Nathan Bennett, Ph.D., Professor of Management in the J. Mack Robinson College of Business.
Nash has an epiphany of sorts: If each one independently attempts to maximize his personal outcome (which, in this scenario, involves pursuing the blonde), they will undoubte
dly trip over one another and, in the end, no one will “win.” He predicts that, by the time their mutual failures to win over the blonde become apparent, it will be too late to turn their energy to her friends—none of the brunettes will want to be second choice. This dilemma causes Nash to comment that Oliver Williamson’s classical view—that through individuals acting in their own best interests, the best interests of the group are met—does not fit the situation. If each classmate acts in his own best interest, then they will all fail.
Instead, Nash understands the situation as one in which each individual’s best move depends on the anticipated moves that other rational players can be expected to make. Understood this way, the best course of action for each individual is to recall the dynamic—espoused in the title of the 1953 movie—that “gentlemen prefer blondes.” Knowing that your classmates are likely to pursue the blonde first, a more effective strategy would be for you to attend to one of the brunette friends. That way, you maximize your chance of winning the attention of one of the women. The critical observation here is the recognition that, in many situations, one individual’s best move is often dependent on the anticipated moves of other players. Just as an understanding of game theory might help a college student understand how to win a date, we suggest that it can help you position yourself to have a successful career.
Game Theory in Our Culture
Game theory continues to be a popular topic; a 2005 Nobel prize was, once again,awarded to game theory scholars. It has been used to provide novel ways to look at wide-ranging phenomena including logistics, investing, marketing, human evolution and terrorism. In popular culture, strategists have used game theory to outline a winning strategy in the spate of reality television shows (The Weakest Link, Survivor, and The Apprentice, for example). These shows share some important characteristics. First, individuals move on to the next round—or are eliminated—based largely on the votes of other contestants. Second, early-round success depends on the contributions of all players. In such contests, the winning strategy involves finding the delicate balance between moves that cause others to conclude that you are too weak to contribute to the group tasks and those that reveal you to be so strong as to be seen by other contestants as a final-round threat. Those who fail to achieve this balance and who appear to be “free riders” in the early rounds may not survive because others conclude that they cannot help the team with early wins. Those who tip their cards and reveal their strength too early will likely be eliminated by temporary alliances of other players.
Not surprisingly, examples of game theory applications abound in competitive sports. For example, the concept of a “moral hazard” is illustrated by the greater propensity for batters in the American League to be hit by pitches than their counterparts in the National League. In the American League, the rules do not require the pitcher to take a turn at bat. As a result, pitchers may As a result, pitchers may not be concerned about experiencing retribution when they throw “at” rather than “to” batters.
ABOUT THE AUTHORS
Nathan Bennett, Ph.D., is Professor of Management in the J. Mack Robinson College of Business. He specializes in leadership and strategy execution, managing innovation and change processes, top management team dynamics, and contextual influences on individual behavior in organizations. Nate has published in numerous widely-read resources for managers including the Harvard Business Review and Wall Street Journal. He is co-author of the 2006 Stanford University Press title “Riding Shotgun: The Role of the COO” and the 2010 book “Your Career Game: How Game Theory Can Help You Achieve Your Professional Goals.” Professor Bennett received both his Bachelor’s degree in Sociology and Master’s degree in Applied Research from Tulane University, and a Ph.D. in Management from Georgia Tech.
Stephen A. Miles is Founder and Chief Executive Officer of The Miles Group. Previously, he was a Vice Chairman of Heidrick & Struggles where he ran the Leadership Advisory Services within the Leadership Consulting Practice and oversaw the firm’s worldwide executive assessment/succession planning activities. With more than 15 years of experience in assessment, top-level succession planning, organizational effectiveness and strategy consulting, Stephen specializes in CEO succession and has partnered with numerous Boards of global Fortune 500 companies to ensure that a successful leadership selection and transition occurs. Stephen holds a Bachelor’s degree in Psychology and a Master’s of Business Administration both from Queen’s University in Kingston, Canada; and a Master’s degree in Psychology from the University of Victoria.
