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By Jeffery Dernbach – Speaker, Presenter, Lecturer, Researcher at jefferydernbach.com
As designers, we often encounter a familiar cycle. Despite our best efforts and rigorous application of human-centered design principles, our pitches sometimes fall flat. This recurring challenge prompted me to explore how game theory could illuminate and improve our design processes. By understanding the strategic interactions within our teams and stakeholders, we can enhance our approach to design advocacy and implementation.
You might be wondering how behavioral game theory or social psychology connects to design. Let’s explore this as we go along.
What is Game Theory?
Game theory, developed in the 1940s by economists such as John von Neumann and Oskar Morgenstern, is the study of mathematical models of strategic interaction among rational decision-makers. It’s used to determine the optimal outcomes where the decision of one player depends on the decisions of others. Initially applied in economics, its principles have since been adopted in various fields, including psychology, sociology, and, more recently, design.
Rational vs. Irrational Players
In game theory, players are anyone you interact with, encompassing customers, colleagues, and competitors. The question arises: are players really irrational? According to behavioral game theorist Borussia Blano de Mesquita, the only irrational players are terrorists and three-year-olds. Everyone else is considered rational, with apparent irrationality stemming from their underlying motivations and limited information.
Key Concepts in Game Theory
To grasp the connection between game theory and design, we’ll explore two key games: Prisoner’s Dilemma and a coordination game. Understanding these games helps us see how game theory applies to design and advocacy, emphasizing cooperation and coordination.
The Prisoner’s Dilemma
Imagine you and a partner commit a crime and are caught. You’re separated for interrogation and face two choices: remain silent or confess. The police use this setup to turn you against each other. If both remain silent, you get a light sentence. If one confesses and the other doesn’t, the confessor goes free while the other gets a heavy sentence. If both confess, you both get moderate sentences.
The game is not against the police but your partner. The optimal strategy, often leading to a Nash equilibrium, is where both players choose the best possible strategy considering the other’s choice. The Nash equilibrium, named after mathematician John Nash, occurs when no player can benefit by unilaterally changing their strategy if the strategies of the others remain unchanged.
Applying Game Theory to Design
As designers and product managers, we use heuristics in our strategies. Two important heuristics are:
Rock-Paper-Scissors: A Mixed Strategy Example
Consider the game rock-paper-scissors. It involves strategy and reputation. Playing multiple rounds, players adapt based on previous outcomes, mixing strategies to stay unpredictable. For instance, if your opponent notices you frequently choose rock, they may start choosing paper more often. To counter this, you mix your choices to make your strategy less predictable, leveraging the element of surprise.
Reputation and Decision-Making
Reputation plays a crucial role in decision-making. For instance, in retail, companies like Walmart use their reputation to influence product placement. Established companies like Procter & Gamble leverage their strong reputation to negotiate prime shelf space for their products. New companies must build their reputation to gain better positioning and leverage in negotiations. This is akin to building trust and demonstrating reliability over time, which is crucial for long-term success.
Real-World Example: Retail Shelf Space
In retail, shelf space is a valuable commodity. Established brands with strong reputations can secure prime locations in stores, such as eye-level shelves or end-of-aisle displays, which attract more customer attention. New brands, lacking this reputation, often start with less favorable shelf positions. To compensate, they may invest in attractive packaging, promotions, or in-store displays to draw attention and build their reputation.
Social Decision-Making
Our daily decisions, both personal and professional, are strategic. From choosing breakfast to social interactions at parties or conferences, we constantly make strategic decisions based on our goals and available information.
Professional Decision-Making
In a professional context, strategic decision-making can involve choosing the right moment to pitch a new idea, deciding how to allocate resources, or navigating office politics. For instance, a product manager might use game theory to anticipate competitors’ moves, allowing them to stay ahead in the market.
Social Contexts and Strategies
In social contexts, such as attending a party or a networking event, we subconsciously employ strategies to maximize our social outcomes. When entering a room, we might scan the area to find the most approachable group, decide whether to start with a drink or food or identify key individuals to connect with. These strategies are influenced by our past experiences, social cues, and the specific context.
Understanding Coordination Assurance
Coordination assurance is a concept in game theory that describes a cooperative game where participants choose the same moves, reacting in predictable ways according to social standards. In game theory, games are broadly categorized into two types: cooperative and non-cooperative games.
The Importance of Cooperative Games in UX Design
As UX professionals, we often engage in cooperative games. We learn and apply principles of human-centered design, design thinking, and product management. Our goal is to create solutions that cater to human needs, validated through extensive research. We develop customer journey maps, affinity diagrams, and other artifacts to ensure our designs are user-centered.
The Challenge of Presenting Design Ideas
Despite our efforts, presenting design ideas to stakeholders can be challenging. Designers often face rejection and resistance. This talk aims to explore why this happens and how we can improve our approach.
Strategies for Effective Design Advocacy
To address these challenges, we need to adopt effective strategies to communicate and advocate for our designs. Here are some key approaches:
Case Studies and Examples
Practical Application and Game Theory in Design
By applying game theory, we can predict and influence outcomes more effectively. Here’s a simplified model:
For example, if developers frequently cite time constraints, emphasize how your design can streamline their work and reduce long-term maintenance costs.
Incorporating game theory into our design processes helps us navigate the complexities of team dynamics and stakeholder interactions. By adopting a cooperative mindset and employing strategic advocacy, we can improve the acceptance and implementation of our design ideas, ultimately enhancing user experiences.
Success in design is not just about creating exceptional products but also about effectively communicating and collaborating with the diverse team that brings those products to life. By understanding and leveraging the principles of game theory, we can become more adept at navigating the intricate landscape of design and advocacy, leading to better outcomes for all involved.
About the Author:
Jeffery Dernbach – Speaker, Presenter, Lecturer, Researcher at jefferydernbach.com
The game theory of consumer behavior, in the context of the blog, examines how consumers make purchasing decisions based on strategic interactions and perceived benefits. It highlights how understanding these dynamics can help UX designers predict and influence consumer choices, creating more effective and appealing products. By applying game theory principles, designers can better navigate user needs and motivations, enhancing overall user experience.
Behavioral game theory, as discussed in the blog, combines traditional game theory with insights from psychology to understand how real people make decisions in strategic situations. It explores the human elements of decision-making, such as fairness, trust, and limited rationality, which influence consumer behavior. By integrating these insights, UX designers can create more intuitive and user-friendly experiences that align with actual human behavior.
An example of game theory in real life, as highlighted in the blog, is the competitive pricing strategies of e-commerce platforms. Companies like Amazon and Walmart constantly adjust their prices based on their competitors’ actions and consumer behavior, aiming to attract more customers while maximizing profits. This dynamic interaction, where each player’s decision affects the others, exemplifies game theory in action in the marketplace.
A prominent example of a company that uses game theory, as discussed in the blog, is Amazon. The e-commerce giant employs game theory principles in its dynamic pricing strategy, where it continuously monitors competitors’ prices and adjusts its own to stay competitive. This strategic pricing helps Amazon attract more customers while maximizing profits, showcasing the practical application of game theory in business.
