Behavioral Economics Demonstrates Need for Business Strategy Gamification
Behavioral Economics Demonstrates The Need for Business Strategy Gamification
First, it’s important to set a foundation by defining behavioral economics. BE studies the effects of psychological, social, cognitive, and emotional factors on the economic decisions of individuals and institutions and the consequences for market prices, returns, and resource allocation, although not always that narrowly, but also more generally, of the impact of different kinds of behavior, in different environments of varying experimental values. (source: Wikipedia). I have to say that this is actually a pretty easy to understand and overall nicely laid out description of such a complicated topic.
Let’s think about a quick scenario: You’re the president of a company and have over 30 years of experience. This experience is a large part of why you are now president. So far, we’ve already proved the need to consider behavioral economics. But let’s continue: You have just put your A-Team in place and created the corporate strategy. It’s now time to look at it and think about the outcomes.
You have 2 choices: 1) Run in through a game theory based computer model that will predict the outcomes of the marketplace based on a) game theory and b) some historical analytics (at best!) or you can 2) have your executive team compete against each other in a real time gamification session (aka: business strategy war game). This takes the ‘theory’ out of game theory. You will be able to watch in real time as behavioral economics roles out in front of you. From there, you can then see what happens, talk about why, and make any necessary changes.
Thus, the need to apply basic behavioral economics theories to the real world situations demonstrates why business strategy gamification is so valuable, interesting, fun, and insightful.