Question

During the pandemic, stockpiling behaviour have been criticized in the newspapers and described as irrational. From a game theory perspective, stockpiling of toilet paper or pasta can be modeled as a prisoner’s dilemma game where individuals anticipate that supermarket will run out of stock. Explain strategic interactions behind the stockpiling behaviour, and why they can be modelled as the prisoner’s dilemma game

Answer 1

Stockpiling phenomena/behaviour is a model used to derive our results envisions consumers as responding optimally to uncertainties in the promotion environment. We show that, all else being equal, consumers will stockpile a promoted product more intensely:
(i) the lower the availability of deal opportunities,
(ii) the smaller the expected deal discount, and
(iii) the lower the uncertainty about the deal/regular price, provided that dealing occurs with high/low frequency.

One of the major reason for this Stockpiling behaviour is to be made responsible for an individual's psychology. Previous work on personality and hoarding behavior is based primarily on hypothetical scenarios. In recent studies it was done amid the coronavirus pandemic itself, providing a rare, direct glimpse into the relationship of personality and stockpiling behavior. To clearly understand this Stockpiling concept we can refer to the basic amenities required for livelihood for example here provided that of for toilet paper for the purpose of sanitation which is a necessary part in the human life. Apart from that here also referred for livelihood is pasta (food) which is the most vital element for humanity to exist. During any worse Pandemic situation it's in the people's mind to store and have an ample support of necessity stuff , as people are under the situation of thinking that the market and the sector would fall short of these things immediately.

This behaviour very well introduces us to a new concept of prisoners dillema game , which is derived of stockpilling behaviour. The prisoner's dilemma is a paradox in decision analysis in which two individuals acting in their own self-interests do not produce the optimal outcome. The typical prisoner's dilemma is set up in such a way that both parties choose to protect themselves at the expense of the other participant.