IF TONY SOPRANO ONLY USED GAME THEORY

HERE IS AN ARTICLE I WROTE ON GAME THEORY AND THE SOPRANOS. TELL ME WHAT YOU THINK;

Tony and Carmela….if they only understood Game Theory!!!



Tony and Carmela Soprano, perhaps televisions most connected and powerful couple, always manage to get what they want; well at least most of the time! Tony manages a family of underlings who work night and day; but mostly at night, to make sure that “The Boss” is happy. And Carmela, she influences and manages others through her culinary talent. After all, it was Carmela who used her Ricotta Pie recipe to influence a sister of a friend (against her will) to write a letter of recommendation for admission to Georgetown University for her daughter Meadow. Tony and Carmela, two individuals who understand power and use it in their own benevolent way.

As influential as the both of them are with members of their extended family, they are totally powerless when trying to outthink and outmaneuver those closest to them, their children. If they only knew Game Theory! Their life would be so much easier.

Fiction often imitates life. Take an episode in the second season of the Soprano’s. It opens with Tony being called to his mother’s now vacant home. The neighborhood is surrounded by police cars and commotion. It quickly becomes obvious to the viewer that some type of underage party has taken place, and in Tony’s childhood home no less. Yes, Meadow was using Grandma’s home for a party. So Tony enters into a scene where the social agenda for the evening has clearly caught up to all the revelers. Little did they know that they would feel much worse physically in the morning! Meadow has done what many of us may have experienced in our adolescence; she had a party, unbeknownst to mom and dad that got a bit carried away.

Meadow should be in a good deal of trouble with Tony and Carmela, shouldn’t she? As any typical Dad would do, Tony drives her home. On the way home he voices his disappointment, but refrains from handing out any type of penance until he gets home to discuss the evening’s activities and subsequent parental strategy with Carmela. Upon walking through the door, where Carmela, the nervous mom is anxiously waiting, Meadow is sent to her room. This is fine with her as she does not want to talk to anyone anyway. Carmela then asks Tony what kind of disciplinary sentence he handed out on the way home. Expecting that Tony reacted in a manner befitting the “head of the family” she shows frustration when he indicates he did nothing. Carmela…”what did you do about it Tony!” Tony…”I don’t know, I yelled, what else am I going to do. Let her sleep it off and we’ll deal with it in the morning.” Carmela lets him know that “there has to be consequences”. “There will be, I hear you”, Tony insists.

As Tony and Carmela prepare to call it an evening there is further discussion. Mom is clearly not happy that “the boss” of the family did not distribute swift and immediate punishment. Yet, Carmela backs off a bit “parents today, you are over a barrel no matter what you do”. Tony chimes in with agreement. He responds by saying that as parents, they can’t overplay their hand. “If she finds out that we are powerless, we’re finished.” Carmela continues in agreement, “yeah, if we take her car away then I become her personal chauffeur, and if we ground her I have to stay home on weekends to be her personal prison guard! Clearly a situation of interdependency. Any one of the players’ in this scenario is affected by what the other in this game do.

The next morning Tony and Carmela are ready to hand out the punishment, although they have not decided what it will be. Meadow shows up in the kitchen, hurting from her hangover. Without any delay or the hint of a strategy both parents forcefully blurt out that she is grounded. Meadow counters with I know I was wrong guys, yada, yada, yada, and her parents, apparently feeling sorry for her, quickly rescind the grounding sentence. Wise beyond her years, Meadow knows that some type of punishment must be handed out. She decides that her best defense is a good offense. She quickly offers to give up her credit card for 2 weeks (keep in mind that the parents pay the bill). Tony counters with taking it for 3 weeks. Meadow winces, “how am I going to buy gas!”(recall that she is no longer grounded). Tony says you have your allowance. Meadow laments that she has already spent her allowance, plus she owes mom money for a scarf she just bought. Mom agrees to put the loan on hold, and Dad agrees to give her $10 a week and she can use the credit card for gas only until full spending privileges are restored in 3 weeks. So no grounding, she has the car, her gas money, and some spending money to boot. Meadow now exits the scene showing some remorse. At the same time displaying a wry smile to those of us watching on HBO. Who do you think came out ahead on this deal?

What we have here is a strategic scenario which speaks directly to the qualities and features of using Game Theory to make better decisions. After all they are playing a game aren’t they?

Game Theory refers to any social situation involving two or more parties. It is the study of rational behavior in situations involving interdependence. So how does Game Theory apply to Tony and Carmela’s situation? How can the Nash Equilibrium; a scenario where all of the players’ expectations are fulfilled and their chosen strategies are optimal, or a Zero Sum Game scenario; I win you lose; help them through their family crisis? Are Tony and Carmela really powerless in dealing with Meadow? Whatever punishment they deal out to her, does it actually backfire on them? Was their chosen strategy optimal? How can they out-strategize their opponent (Meadow)? Game Theory helps to minimize the high costs associated with indecision. In the case of the Soprano parents, their cost is social. If they take too much time to come up with a sufficient punishment it loses its affect. At the same time, the wrong punishment will only serve to wreak havoc with their schedules, in addition to not serving as a deterrent for future like behavior.

So how can Game Theory help? More applicable to business situations, as opposed to raising our children by it, Game Theory is the study of rational behavior in situations involving interdependencies. Interdependencies exist when any player in the game is affected by what others do, and as a result that players actions affect others. So how can Tony and Carmela maximize their result? This blending of mutual and conflicting results is what makes Game Theory useful, as well as fascinating.

In its simplest form Game Theory can be used to help Tony and Carmela find an equilibrium point in solving their punishment dilemma. It is clear that this scenario is not conducive to a Zero Sum Game application. Meaning what Meadow gives up is not Tony and Carmela’s gain. At equilibrium each player is doing the best he or she can given the other’s actions. Equilibrium is achieved when no player has an incentive to switch to a different strategy. In other words no player regrets the strategy they are going to follow. If the car is taken away, they end up being her transportation. If she is grounded, they need to interrupt their social schedule to stand guard to make sure that the sentence is fulfilled. If they take the credit card away they still have to shell out spending money. Is there an opportunity for a Nash Equilibrium here? The foundation for Game Theory is math. So frequently values are used to judge and compare outcomes.
Let’s take a look;

Possible Strategies:

· Let’s say that an ideal resolution would result in a value of plus 5 for Tony and Carmella, and a value of zero for Meadow. This would be the equilibrium point. Negative values do not benefit anyone.
· So if the car is taken away both Tony and Carmela are inconvenienced as they have to get Meadow around. Meadow is somewhat put off but she still gets to where she wants to go, when she wants to get there. So the value for Tony and Carmela would be (for example) -2, and Meadow -1.
· Grounding, another option, results in Meadow being stuck at home, but Tony and Carmella are as well, the value for that might be -3 for T/C and -2 for M.
· Let’s try taking the credit card away. Well that resulted in out of pocket money being given to Meadow anyway. So Tony and Carmela are still worse off, let’s say -4 as compared to -3 for Meadow.

In all 3 scenarios Meadow does suffer a bit, but her parents are put out as well. Following any one of the above strategies results in inefficient outcomes for Tony and Carmela. Their best strategy to find an equilibrium point. This will result in an efficient outcome for all of the players’. Since the costs and benefits of each option are not fixed, an efficient outcome lies in achieving an equilibrium point. This is not a we win, you lose game they are playing. Tony and Carmella should strive for a resolution where all of the players’ expectations are fulfilled and the choice strategy is optimal. Now let’s try a fourth approach. No grounding, no money restrictions, etc;

How about assigning Meadow to 20 hours of volunteer service for her church, local food bank, etc. To be completed by a certain date. Tony and Carmella are not put out. Meadow still has a means to transport herself; she still has access to cash, etc.

Have they reached an efficient equilibrium point? Yes, as Tony and Carmela are now on the positive side of the ledger. Everyone’s expectations have been met. They enforce a punishment that has meaning, and provides benefit to others. Whatever Meadow loses (perhaps time with her friends) will not affect Tony and Carmella. They do not have to cart her around, nor do they have to give her any extra cash. Meadow knew that she would have to face some type of punishment. So that expectation is filled. Yet she still can drive, and she can still use the credit card. All 3 parties certainly have no reason to switch to a different strategy, and there are certainly no regrets. Meadow may even derive some benefit from the volunteer service. Nevertheless given the other options she is no worse off, and no better off as well. So Tony and Carmela achieve a value of 5, and Meadow zero. A Nash Equilibrium has been achieved. Does this fit well as a business strategy? I think so.

Created in 1944, Game Theory is finally being recognized as a platform for developing business strategy. It can be used as a tool to affect negotiations, contracts and bidding situations. It is the foundation for Agent Based Modeling, which is an analytical technique that helps companies forecast consumers individual and collective responses to new product offerings, price changes or marketing strategies. Last but not least, it will help you understand and derive benefit from the diverse talents being brought to the table by the next dominant generation; The Gamer Generation!