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Application of Game Theory to Railway Decision Making
Abstract
Over the last few decades various forms of railway privatization have taken place in many different countries. As a result, it is now common for several parties to be involved in the ownership, operation and maintenance of railway system assets. The decisions made by each impact on all others. Game theory (GT) provides the framework to obtain the optimal decisions taking into account the various interactions. This paper gives a brief introduction to GT and its application to railway decision-making.
... A detailed analysis of the game models in business areas is given in [5]. In transport, game theory has been applied to make decisions about transport problems [6,7], route choices in transport network [8,9], transport policy [10][11][12], travel demand management [13,14], high-speed rail and air transport [15][16][17], railway companies [18][19][20], transport companies [21][22][23][24][25][26][27], urban public transport [28][29][30][31][32], logistics and supply chains [33,34], and intermodal transport [35]. ...
... In [18], the authors presented a concept for applying game theory in some sectors of the railway systems, such as railway privatization and maintenance of railway infrastructure and rolling stock. The game model includes three players (track operator, rolling stock operator and track maintenance contractor). ...
The choice of management strategy for companies operating in different sectors of the economy is of great importance for their sustainable development. In many cases, companies are in competition within the scope of the same activities, meaning that the profit of one company is at the expense of the other. The choice of strategies for each of the firms in this case can be optimized using game theory for a non-cooperative game case where the two players have antagonistic interests. The aim of this research is to develop a methodology which, in non-cooperative games, accounts for the benefits of different criteria for each of the strategies of the two participants. In this research a new integrated sequential interactive model for urban systems (SIMUS)–game theory technique for decision making in the case of non-cooperative games is proposed. The methodology includes three steps. The first step consists of a determination of the strategies of both players and the selection of criteria for their assessment. In the second step the SIMUS method for multi-criteria analysis is applied to identify the benefits of the strategies for both players according to the criteria. The model formation in game theory is drawn up in the third step. The payoff matrix of the game is formed based on the benefits obtained from the SIMUS method. The strategies of both players are solved by dual linear programming. Finally, to verify the results of the new approach we apply four criteria to make a decision—Laplace’s criterion, the minimax and maximin criteria, Savage’s criterion and Hurwitz’s criterion. The new integrated SIMUS–game theory approach is applied to a real example in the transport sector. The Bulgarian transport network is investigated regarding route and transport type selection for a carriage of containers between a starting point, Sofia, and a destination, Varna, in the case of competition between railway and road operators. Two strategies for a railway operator and three strategies for a road operator are examined. The benefits of the strategies for both operators are determined using the SIMUS method, based on seven criteria representing environmental, technological, infrastructural, economic, security and safety factors. The optimal strategies for both operators are determined using the game model and dual linear programming. It is discovered that the railway operator will apply their first strategy and that the road operator will also apply their first strategy. Both players will obtain a profit if they implement their optimal strategies. The new integrated SIMUS–game theory approach can be used in different areas of research, when the strategies for both players in non-cooperatives games need to be established.
This is the first paper in the literature to formally study the cost impact of competitive tendering in rail maintenance. Sweden progressively opened up the market for rail maintenance services, starting in 2002. We study the cost impacts based on an unbalanced panel of thirty-nine contract areas between 1999 and 2011, using econometric techniques. We conclude that competitive tendering reduced costs by around 11%. Importantly, this cost reduction was not associated with falling quality as measured by track quality class, track geometry or train derailments; quite the reverse. We thus conclude that the gradual exposure of rail maintenance to competitive tendering in Sweden has been a success.
This paper deals with railway deregulation and related reforms by means of a case study of Sweden, studying the 1988 split of railway infrastructure from operations and the subsequent steps of vertical and horizontal disintegration to a market characterized by decentralization and intra-modal competition. We also analyze the current market situation, in terms of the actors and their roles, and industrial organization measures. This assessment is used to discuss the sustainability of the current regulatory structure, concluding that although it seems more sustainable than in the past, regulators will sooner or later have to deal with some of its inconsistencies.
Serving to unify the existing literature on extended warranties, maintenance service contracts and lease contracts, this book also presents a unique perspective on the topic focussed on cost analysis and decision-making from the perspectives of the parties involved.
Using a game theoretic approach together with mathematical modelling, results are presented in an integrated manner with key topics that require further research highlighted in order to serve as a starting point for researchers (engineers and statisticians) who are interested in doing further work in these areas.
Designed to assist practitioners (managers, engineers, applied statisticians) who are involved with extended warranties, maintenance service contracts and lease contracts, the book provides them with the models and techniques needed for proper cost analysis and effective decision-making.
The book is also suitable for use as a reference text in industrial engineering, applied statistics, operations research and management.
Condition-based maintenance for effective and efficient rolling stock capacity assurance: a study on heavy haul transport in Sweden
- M Palo
Mapping railway maintenance contracts-the case of Netherlands, Finland and UK, VTI report
- J E Nilsson
- J Nyström