There are games everywhere, and we are creating them all the time without even knowing it. We have the “get the project green” game, the “highest team velocity wins” game, and the “meet the go-live date” game. But it’s about time we learnt how to design better games, having people compete to win the “create the most value” game or “increase stakeholder happiness” - much better alternatives in our world. Most commonly used in war games and global economics, game theory is a branch of mathematics not just reserved for those interested in world domination. Defined as “the study of mathematical models of conflict and cooperation between intelligent rational decision-makers”, it helps us understand and analyse how people may behave under different circumstances. It helps us analyse payoffs, determine implications and strategies that people will take and hence utilise this information to create games that drive behaviour. Learn the basics of game theory through an exercise and examples, predict people’s next move and become a good (not evil) gamemaster.

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2. Game theory for a better world
Gendry Morales

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Gendry likes…
* Percentages are indicative
only and based on about
5mins of analysis
human sciences
nerdy stuff
peace, love and
harmony
technology

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Game theory
Gamification
Changemaking
Metrics &
KPIs
A first principles style
mathematical analysis of
people’s strategies
Game mechanics
in non-game
environments

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John Von Neumann & Oskar
Morgenstern
In 1940s the book Theory of Games
and Economic Behavior established
game theory as a field of study.
John Nash
Expanded the application of
game theory, introducing
mutual consistency of players
strategies

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Game: Any set of circumstances that has a
result dependent on the actions of two of more
decision makers ("players")
Players:A strategic decision maker within the context of the game
Strategy: A complete plan of action a player will take given the set of
circumstances that might arise within the game
Rules: the information and instructions given
Payoff: The payout a player receives from arriving at a particular
outcome. The payout can be in any quantifiable form, from dollars to
utility
Equilibrium:The point in a game where players have made their
decisions and an outcome is reached.

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Let’s play a game
Choose a number between 0 and
100. The winner is the one who
guesses 2/3 of the average of all
the other numbers chosen.
I’ll give you a moment to think about it the
number you’ll choose.

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LET’S ANALYSE
YOUR STRATEGIC
THINKING

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how about I guess
50
while my brain catches up to this
question - that philosoraptor is
so funny - it’s half of 100 and it’s
a nice round number

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hang on, if everyone does that
then I need to guess 2/3 of that
average. 2/3 x 50 =
33

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but if everyone does that too
then i’ve got to guess 2/3 of
that. 2/3 x 33 =
22
this is starting to get a bit tricky

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…let’s wait while some people
do a few more of these 2/3s
sums…

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wait a minute if I keep doing this
i’ll end up at 1 or even 0. that’s
it, i’ve got it! the answer is
0

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or is it? how smart are these
people, are they thinking like me
(hmmm, let’s look around the
room). Gee I don’t know, how
about
5

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Hilarious blog kinda thing with stick figure
cartoons
They ran this same game with their readers.
There were a total of 5,101 reader guesses.
Let’s look at their data

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Start here
End here

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illogicalslightly
strategic
almost
there
using iterative elimination of
weakly dominated strategies
1s & 0s
pure
strategy
nash
equilibrium
hot pink is
a winner!

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A bit of theory and jargon

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The Nash equilibrium is a solution concept of a non-cooperative game involving
two or more players in which each player is assumed to know the equilibrium
strategies of the other players, and no player has anything to gain by changing only
his or her own strategy.
A pure strategy provides a complete definition of how a player will play a game. It
determines the move a player will make for any situation he or she could face.
A mixed strategy is an assignment of a probability to each pure strategy.
Dominance
A strategy is strictly dominant if it strictly dominates every other possible
strategy.
A strategy is weakly dominant if it dominates all other strategies, but some (or all)
strategies are only weakly dominated by it.
A strategy is strictly dominated if some other strategy exists that strictly
dominates it.
A strategy is weakly dominated if some other strategy exists that weakly
dominates it

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People aren’t always logical
Put yourself in other people’s shoes,
think about their strategy then develop
your own and iterate a lot until you get
to the equilibrium

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Game theory
Gamification
Changemaking
Metrics &
KPIs
The design of
Metrics and KPIs
and their impact
on behavior
change in
Software Delivery

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Metric – Story Points Velocity
Rules:Create a burn up chart showing
your actual team velocity vs estimated so
that you can track and improve progress and
estimation.
Strategies:
Reaches a Nash Equillibrium nicely Dominance Pretty
Good?
Review and retro ✔ ️ ✔ ️
Collaborate more ✔ ️ ✔ ️
Improve and try harder ✔ ️ ✔ ️
Players:Just the team,
no other players allowed

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Metric – Story Points Velocity
Rules:Track team velocity, but some
new players assume meeting or exceeding
points is winning and want to make it a
metric
Strategies:
Dominance Pretty
Good?
Some players ask for velocity targets to be
met
✔ ️ Nup
In response team meet targets by bloating
their estimations
✔ ️ Nup
Players:The team, plus
managers and people a bit
further removed from the
team and agile.

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Payoffs: represent the motivations of
players. Payoffs may represent profit,
quantity, "utility," or other continuous
measures (cardinal payoffs), or may
simply rank the desirability of outcomes
(ordinal payoffs).

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bonus & incentives

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Metric – Chasing Value
Rules:Show your benefits velocity,
estimating and forecasting ROI, customer
growth etc, then showing the actuals.
Strategies:
Iteratively adding better strategies Dominance Pretty
Good?
Reducing cycle times ✔ ️ ✔ ️
Learning how to deliver more value ✔ ️ ✔ ️
Test benefits earlier ✔ ️ ✔ ️
Players:Team members
and people outside the
team. To be sure, include
the people who monitor
the actuals already.

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Metric – Chasing Value
Rules:Show your benefits velocity,
estimating and forecasting ROI, customer
growth etc, then showing the actuals.
Strategies: Payoff:competitive funding
Iteratively adding better strategies Dominance Pretty
Good?
Reducing cycle times ✔ ️ ✔ ️
Learning how to deliver more value ✔ ️ ✔ ️
Test benefits earlier ✔ ️ ✔ ️
Players:Team members
and people outside the
team. To be sure, include
the people who monitor
the actuals already.

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Not everything that
counts can be
counted and not
everything that can
be counted counts
- Albert Einstein

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Metrics that can create good games
• Reduce Cycle time
• Increase Throughput
• Predictability in meeting Sprint goals
• Stakeholder/PO/Customer Satisfaction
• Benefits velocity

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Metrics that create dodgy games
• Get the status green (red on the inside)
• Meet the go live date (leave out the quality
and scope)
• Decrease the number of defects found (lack
of transparency)
• Emphasising actuals, money spent (sunk cost
fallacy… Vinh Pham)

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Notice the games being
played
See other people’s
strategies & think a few
more steps ahead
Nerd it up with game theory & design better
games, for a better world

35. Gendry Morales,
Principal Consultant
Thank you