Application of Game Theory in Studying Subcontractors’ Cooperation in Construction Projects - Joint Resource Management

Resource management is one of the most significant roles of every project manager in today’s highly competitive construction industry. One solution to reduce costs of resources is to manage them jointly. Joint resource management is based on cooperation between subcontractors who are seeking a win-win resolution. It is an attempt to schedule the project tasks, enabling subcontractors to optimally utilize resources and minimize their idle times. Cooperative game theory, describing a series of moves leading to an integrative conclusion, is a powerful tool for studying cooperation between subcontractors. Construction projects are not too different from real games. By using game theoretic language, a construction project is defined as a “game” in which subcontractors are considered as game “players” and are able to manage their own resources to maximize their “profit”. Talking of cooperative game theory, these players develop strategies to maximize the overall profit of project based on the fact that these strategies would bring more profit to each player too. Cooperative game theory is used to analyze interactions between subcontractors to allocate the game profit among the players. In order to achieve this, subcontractors should have a clear understanding of cooperation and understand mutual objectives to provide a sound basis for a synergistic climate in joint resource management. One key point in understanding cooperation is trust. Trust is known as one of the fundamental principles of cooperation. It can lead to a cooperative behavior between subcontractors and act as the glue holding subcontractors together. Trust is defined as a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another. “Trust” game (also known as “stag hunt”) as well as “Prisoner’s Dilemma”, have been used to represent trust and cooperation problem in the game theoretic framework. Compared to what has been done in other areas, less attention has been given to trust in construction projects. With all these in mind, the main purpose of this study is to study the cooperation between subcontractors employing cooperative game theory. After reviewing the theoretical foundations of game theory and in light of previous studies done, a model is constructed with the aim of optimizing common resources. The gains of joint resource management are analyzed and allocated by applying the cooperative game solution. A case study is also used to analyze the problem and illustrate the model’s practical contribution to construction projects. Last but not least, the cooperation game is studied utilizing the stag-hunt game, and a set of strategies to achieve the best outcomes in cooperation is offered