How to Reduce Panic Buying Through Game Theory

How to Reduce Panic Buying Through Game Theory

With the ongoing tough times, Chris Stiffe from Keele University hopes that people will pull together, stay calm, and work as a unit to make sure the society keeps running smoothly. However, this is usually not the case, and it is more evident now.

On eBay, toilet papers have an incredible price; videos of supermarket fights populate the internet too. For instance, a man in Tennessee bought 17,000 bottles of hand sanitizers with the hopes of selling them for an enormous profit later. Also, in the UK, where Stiffe says he is under lockdown, they see more bare shelves in sores and long online queues to order groceries by delivery.

Nevertheless, he says they also see acts of kindness and benevolence, many doctors working long shifts to help treat sick patients and social media campaigns to allow the vulnerable individuals, the elderly to have some dedicated hour to shop in supermarkets before they open. The question Stiffe relays is, how can we elucidate these two approaches to crises?

The decision of whether to purchase supplies in a socially responsible way, or to hoard them, according to Stiffe is related to game theory. The approach is based around the understanding that the pay-off in some instances is based not only on what people do, but also on what others do as well. For example, getting the food we need from a supermarket is wholly dependent on us, and many other shoppers are acting sensibly. If people decide to be socially responsible, then it is of little effect if others choose to panic buy.

Social psychology research also says that there are two main motives for selfish behavior, greed, and fear. When individuals are greedy, they are not concerned with others and take what they want for their benefit. Fear is, however, more complicated. In this situation, people may want to act in a socially responsible way, but are concerned that others will not.

Reference

https://theconversation.com/the-game-theory-of-panic-buying-and-how-to-reduce-it-134107