Using game theory to assess multi-company strategies in watershed management

Luke Ogilvie Thompson; Alexandre Bevilacqua Leoneti; René Bañares-Alcántara; Eduardo Cleto Pires

Luke Ogilvie Thompson University of Oxford
Alexandre Bevilacqua Leoneti University of São Paulo
René Bañares-Alcántara University of Oxford
Eduardo Cleto Pires University of São Paulo

Keywords: environmental impacts, strategy, watershed.

Abstract

The main objective of this work was to evaluate the use of game theory as a strategic tool for watershed management decision-making. An engineering problem case study was used in which three organizations compare various scenarios when deciding where to locate a polluting plant on a watershed. Six games were modeled to provide a variety of conditions that could feasibly be implemented and were simulated using software for finding Nash Equilibria solutions. The results show that game theory can provide key insights, such as the consideration of other players’ strategies, and identify possible pitfalls that may occur when the companies seek only to maximize their individual profitability.

Author Biographies

Luke Ogilvie Thompson, University of Oxford

Luke obtained a Masters of Engineering from Oxford University, with a focus on Environmental and Process Engineering. He now runs a Medical Device start-up

Alexandre Bevilacqua Leoneti, University of São Paulo

Assistant Professor at Ribeirão Preto School of Economics, Business Administration and Accounting. He holds a Mathematics Applied Bachelor’s degree from University of Sao Paulo (2008) and also a Master’s degree in Business Administration from University of Sao Paulo (2009). His PhD is in the area of Sanitary Engineering from University of São Paulo (2012). In addition he did an internship at Oxford University as Academic Visitor in 2010. He has experience in quantitative methods applied to decision-making, doing research mainly in the following areas: multivariate data analysis, nonparametric statistics, game theory, multi-criteria decision, social choice theory, and sustainability.

René Bañares-Alcántara, University of Oxford

Reader in Engineering Science at the University of Oxford and an Engineering Tutor at New College. He has a BEng from UNAM (Mexico) and an MSc and PhD from Carnegie Mellon University (Pittsburgh, USA), all of his degrees are in the field of Chemical Engineering. His research interests are in the area of Process Systems Engineering (mainly process design, synthesis and simulation, but also diagnosis and control) and the development of decision support tools that integrate Computer Science techniques in the solution of engineering problems (e.g. semantics, inference, knowledge representation). During the last two years he has been involved in projects related to the chemical storage of renewable energy. He has (co-)authored 60 journal papers and around 100 other refereed publications of various kinds.

Eduardo Cleto Pires, University of São Paulo

Associate Professor at Sao Carlos School of Engineering. He is graduated in Mechanical Engineering from the University of São Paulo (1977), master's degree in Mechanical Engineering from the Pontifical Catholic University of Rio de Janeiro (1981), and PhD in Civil Engineering Hydraulics and Sanitation at the University of São Paulo (1985). He participated in post-doctoral programs at Miami University (USA) 1985-1987 and the University of Oxford in 2008. He has experience in Sanitary Engineering with emphasis in Water Treatment supply and Wastewater, doing research on the following topics: anaerobic treatment, mathematical models, activated sludge, UASB reactors and advanced oxidation processes.

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