Four Brunettes and a Blond
Using the Nash Equilibrium to describe a new way of doing business.
This White Paper poses a new economic methodology of Field Service Management, based on the mathematics of game theory and the work of Nobel Laureate John Nash
This White Paper’s title derives from the movie ‘A Beautiful Mind’. In the movie, future Nobel Prize winner John Nash observes a blonde and four brunettes enter a bar. He and his three friends would like to ask them out. All the men prefer the blonde over the brunettes. But, if they ask out the blonde first and get rejected, they cannot score with any of the brunettes. Let’s attach values to this. Scoring with the blonde is worth 10, a Brunette is 5, and Nothing is 0.
True enough, if all four men swarm the blonde, they each get 0. If all four men each take a brunette, they get a payoff of 5.
Often in Field Service Management, there are three players involved:
- The Customer needing the work (C)
- The Service department that receives the work order (S) and
- Field service (F)
Over time, natural competitions develop. For examples, customers learn that if they say they have an emergency they get faster service, service learns to overbook or play games with field service schedules, and Field Service learns the metrics by which it is being measured and places meeting the metrics above actual best customer service. Roughly speaking this represents Adam Smith economics, where the best result comes from everyone in the group doing what’s best for himself.
I suggest that another economic model is better for long term success of all three, one that comes from the works of Thomas Nash and game theory. The Nash Equilibrium is a set of strategies where no player has a unilateral incentive to change strategies. The player knows what his opponent may do in every circumstance, but the player will not unilaterally change strategies regardless of the other player’s moves. This is not cooperation. Rather, Good communication between all 3 parties enables the knowledge of the most profitable strategy being played.