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Procedia Computer Science 207 (2022) 3988–3997

26th International Conference on Knowledge-Based and Intelligent Information & Engineering

26th International Conference on Knowledge-Based and Intelligent Information & Engineering
Systems (KES 2022)
Systems (KES 2022)
Supply chain decision making with use of game theory
Supply chain decision making witha* use of game theory
Andrzej Rzeczyckia*
Andrzej Rzeczycki
a
University of Szczecin, Institute of Management, Cukrowa 8, 71-004 Szczecin, Poland
a
University of Szczecin, Institute of Management, Cukrowa 8, 71-004 Szczecin, Poland

Abstract
Abstract
Game theory, due to its potential in creating behavioral models, is a tool used in decision making in supply chains. However, the
achievements
Game so far
theory, due to have focusedinon
its potential the mathematical
creating aspects.isThe
behavioral models, article
a tool usedconsiders themaking
in decision behavioral approach
in supply to However,
chains. this problem,
the
achievements
pointing to theso far have focused
importance on the the
of maximizing mathematical aspects. The
manager's usefulness article considers
in making decisions.the
Anbehavioral
experimentapproach
(games) to
wasthis problem,
carried out,
combinedtowith
pointing the methodsofofmaximizing
the importance statistical analysis and simulation,
the manager's usefulnessusing the assumptions
in making decisions.ofAntheexperiment
game theory. Theirwas
(games) purpose wasout,
carried to
assess the with
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the individual characteristics
of statistical of the
analysis and decision-maker
simulation, using theonassumptions
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in the game
field of solving
theory. logistics
Their purposeproblems
was to
occurring
assess in supply
the impact chains.
of the This allowed
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of the decision-maker on the manager in(player)
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solving logistics scope
problems
(games) allows
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in supply the results
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to conclude however,
that Assigningit depends
to the on the character
manager (player)ofantheappropriate
player himself.
decision scope
(games) allows to rationalize the results of these decisions, however, it depends on the character of the player himself.
© 2022 The Authors. Published by Elsevier B.V.
© 2022 The Authors. Published by ELSEVIER B.V.
This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0)
This
© is an
2022 open
The accessPublished
Authors. article under
byofthe CC BY-NC-ND
ELSEVIER license (https://creativecommons.org/licenses/by-nc-nd/4.0)
B.V.committee
Peer-review under responsibility the scientific of the 26th International Conference on Knowledge-Based and
This is an open
Peer-review
Intelligent access
under
Information article under
responsibility CC BY-NC-ND
of the scientific
& Engineering Systems committee
(KES license
2022) (https://creativecommons.org/licenses/by-nc-nd/4.0)
of KES International
Peer-reviewsupply
Keywords: under chain, decisionofmaking,
responsibility game theory
the scientific committee of KES International
Keywords: supply chain, decision making, game theory

1. Introduction
1. Introduction
Constructing a supply chain strategy is inseparable from decision making. In strategic terms, decisions should be
Constructing
understood asa elements
supply chain
of thestrategy is inseparable
information from decision making.
and decision-making process, Insupported
strategic by
terms, decisions
planning, should be
organization,
understood as elements of the information and decision-making process, supported by planning,
motivation and control processes, the purpose of which is to resolve the key problems of the organization's organization,
motivation andsurvival
operations, its control and
processes, the purpose
development, of which emphasis
with particular is to resolve
on the theimpact
key problems of the organization's
of the environment and nodal
operations,
factors of internal production potential [ 36]. Thus, decisions constitute the choice of one possibility from and
its survival and development, with particular emphasis on the impact of the environment nodal
a specific
factors of internal production potential [ 36]. Thus, decisions constitute the choice of one possibility
set, which must consist of at least two elements. The choice of one option is defined as a decision-making process,from a specific
set,
whichwhich
is a must consist
thought of at during
process least two elements.
which The choice
the directions andofmethods
one option is defined
of action are as a decision-making
consciously determinedprocess,
[21].
which is a thought process during which the directions and methods of action are consciously determined [21].

* Corresponding author.
Email address:author.
* Corresponding andrzej.rzeczycki@usz.edu.pl
Email address: andrzej.rzeczycki@usz.edu.pl
1877-0509 © 2022 The Authors. Published by ELSEVIER B.V.
This is an open
1877-0509 access
© 2022 Thearticle under
Authors. the CC BY-NC-ND
Published license
by ELSEVIER B.V. (https://creativecommons.org/licenses/by-nc-nd/4.0)
Peer-review under
This is an open responsibility
access of the scientific
article under CC BY-NC-NDcommittee
license of KES International
(https://creativecommons.org/licenses/by-nc-nd/4.0)
Peer-review under responsibility of the scientific committee of KES International
1877-0509 © 2022 The Authors. Published by Elsevier B.V.
This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0)
Peer-review under responsibility of the scientific committee of the 26th International Conference on Knowledge-Based and Intelligent
Information & Engineering Systems (KES 2022)
10.1016/j.procs.2022.09.461
 Andrzej Rzeczycki et al. / Procedia Computer Science 207 (2022) 3988–3997 3989
2 Andrzej Rzeczycki / Procedia Computer Science 00 (2022) 000–000

Logistics decisions are a set of actions taken, which must be adapted to the changing environmental conditions,
determined by the complex structures of the environment in which supply chains operate. Properly undertaken, they
eliminate to some extent the threats and the risk of non-performance of tasks and processes, ensuring the
effectiveness and efficiency of their implementation. Choices made in supply chains and their links are dictated by
the adopted strategic goals. This goal may be profit or increase in the company's value, while the authors of
managerial theories of the company indicate that companies managed by managers implement a bundle of goals
(multi-factor goal functions), but their basic goal is to achieve a certain level of satisfactory profit, especially in the
long term. In addition to this overarching goal, the actions of managers are conditioned by other stimuli, including:
the desire to receive higher remuneration, gain prestige, and increase the scope of their own decision-making. For
this reason, managers pursue alternative goals of the company, which include: maximizing sales revenues,
maximizing the company's growth rate, or maximizing a certain category of expenses in the enterprise [33]. O.E.
Williamson [39] points out that top managers maximize their own utility function rather than the owners of the
company. The utility function of managers depends on the amount of remuneration, the sense of job security, the
level of discretionary power, social perception of the importance of their work and the prestige associated with
managing numerous personnel. There is also satisfaction from luxury offices, company cars, various categories of
entertainment expenses, discretionary capital expenditures, etc. The utility maximization model is presented in
Figure 1.
U3
U2
discretionary
U1
profit
D
π1

E
π2

π
S1 S2 discretionary expenses

Fig 1. Model of maximizing the utility of managers [33]

The relationship between discretionary expenditure (mainly allocated to personnel) and the level of profit realized is
described by the profit curve π. Initially, it is possible to indicate a positive correlation between expenses on
personnel and profit realized by the company, but after exceeding a certain ceiling of expenses (S1), their further
increase causes a decrease in profit. The manager maximizes his utility at the tangent point of the highest
indifference curve and the profit curve (point E), which corresponds to the amount of discretionary expenditure S2
and the profit at the level of π2. Managers in their proceedings do not follow the profit maximization criterion, but
choose a higher level of discretionary expenses, which affects the amount of the company's financial result. The
functioning of each logistic system is determined not only by the management, but also by employees with its
structure, competences and ambitions. The managerial staff plans, diagnoses, resolves and assesses all problems of
this system, and employees should, using the information, strive to specify and identify tasks and mechanisms of
their operation that would enable the recognition of the condition of the logistics system and contribute to its proper
functioning [42]. Thus, the decision made is influenced by such elements as competences, attitudes, character traits
and the level of employee involvement. An important element influencing the decisions made is also the issue of
managerial perception, which in the area of strategy indicates its dual nature: physical and mental [17]. The physical
reflection of the strategy is the allocation of resources, routines and organizational competences, as well as
undertaken strategic actions that are subject to direct observation, but would not take place without the decisions of
managers. Strategy is cognitively conditioned, but the relationship between mental representation and reification of
strategy is complex and two-way. The need to study this relationship is expressed in the design of
3990 Andrzej Rzeczycki et al. / Procedia Computer Science 207 (2022) 3988–3997
Andrzej Rzeczycki/ Procedia Computer Science 00 (2022) 000–000 3

microfoundaments, ie the postulate of seeking explanations for organizational phenomena at lower levels of analysis
[3]. Imperfection, or in other words, cognitive limitations, are expressed in the selective perception of reality, but
appropriate to a specific manager, in a specific organization and specific conditions. The consequence of this are two
key assumptions that should be made when examining managerial decisions: about the existence of a cognitive
representation, which is developed for the manager's own needs, and about the imperfection of this representation. In
the literature on the subject, two interpretations of the representation can be distinguished: limiting and generative.
The restrictive interpretation focuses on the selectivity of representation, that is, the concentration on selected
elements of the environment and the relationships between them, ignoring all other elements. Thus, in this approach,
it is possible to notice the cognitive deficiencies of managers and the assumption of limited rationality [15].
Generative interpretation concerns the creative, and even theoretical, nature of representation. Therefore, it focuses
on what managers perceive, and not on what they do not perceive [10].

2. Game theory in decision making in the supply chain

The decision-making process in the supply chain includes defining and redefining the strategy in response to or
anticipating changes in the environment, and often triggering them, and including the related implementation
process, in which resources and skills are disposed to achieve the adopted long-term development goals . Strategic
logistic decisions can be conventionally divided into two groups. The first one includes, above all, the selection of
"products - markets" to which the company attaches the greatest importance to logistic services. This choice is about
determining the scope of vertical integration in the field of logistics, and therefore determining from and to which
point each company in the chain carries out logistics in procurement and distribution. This matter has to be
considered separately for each product in each market. This area also includes decisions regarding the company's
general relations with suppliers and recipients in the field of logistics. The second group of logistic strategic
decisions concerns the relationship "customer service standards - company logistic costs" and is directly related to
the methods of gaining a competitive advantage adopted in the company. This relationship is largely determined by
the arrangements made in the first group [9]. The emergence, operation and development of a supply chain strategy
in practice involves a large number of decisions that are interrelated. The right strategic decisions in logistics ensure
the efficiency of the supply chain and concern, among others: the selection of strategic suppliers of materials and
semi-finished products; make or buy decisions; selection of the subject structure of sale, distribution network;
planning the supply chain structure (number of links, their location, the role of units and the leader); network
modeling and reorganization; forecasting the demand stream, selecting the appropriate management strategy
allowing for greater efficiency of logistics activities, including inventory management, warehouse management,
selection of the distribution system, transport or waste management. Logistic strategic decisions in the supply chain
are also decisions involving the rationalization of costs, while ensuring effective customer service, ensuring the
appropriate flow of information.
Problems with making decisions in the supply chain with the use of game theory are analyzed by many authors.
Among the considerations in this area undertaken over the last twenty years, in particular, one can indicate scientific
works on:
• operation of single-channel, two-stage supply chains with stationary demand, taking into account the costs
of maintaining stocks and contractual penalties charged in each link of the supply chain [7],
• managing motivational conflicts in the supply chain with the use of various types of contracts as forms of
incentive, e.g. by establishing commercial terms of the contract, defining the transfer payment system [5],
• discussing conflicts occurring in supply chains with the use of non-cooperative and cooperative games in
static and dynamic settings, with particular emphasis on techniques showing the existence and uniqueness
of equilibria in non-cooperative games [6],
• the mechanism of non-cooperation in a decentralized two-stage supply chain consisting of one supplier and
n sellers in the conditions of sufficient and insufficient supply [20],
• conflict modeling and coordination in multichannel distribution systems owned by producers and
intermediaries [38],
• bilateral negotiations in supply chains in games with complete and incomplete information, using the
perfect balance in conquering [40],
 Andrzej Rzeczycki et al. / Procedia Computer Science 207 (2022) 3988–3997 3991
4 Andrzej Rzeczycki / Procedia Computer Science 00 (2022) 000–000

• solving the problem of transshipment in order to maintain stable conditions in the supply chain using
cooperative games and the concept of Shapley's values [32],
• application of game theory to the analysis of the life cycle of bottle packaging, with the presentation of
determinants of the selection of reusable and disposable bottles and determination of the optimal bottling
strategy depending on the bottler's expectations regarding consumer cooperation [19],
• analysis of the competitiveness of the supply chain defined by three parameters: information about the
supply chain, supply chain strategy and the amount of collective payments, using game theory and
verification of the effectiveness of games in practice, measured by the achieved market share [25],
• searching for the best solution using game theory in planning logistics packaging, taking into account the
type of packaging, its life cycle and the level of returns [4],
• seller-buyer relationships surveyed using non-cooperative and cooperative games, using Stackelberg's
strategy as a concept of a solution for a non-cooperative game and effective Pareto solutions for a
cooperative game [13],
• analysis of the problem of allocating cost savings from sharing information on demand in a three-link
supply chain consisting of a producer, distributor and retailer using cooperative games, along with
numerical verification examining the impact of the autocorrelation coefficient of demand and the cost of
ownership and the shortage of units on the distribution system [24 ],
• distribution of supply chain risk based on cooperative games, with an indication of various scopes of
applications of Shapley's values and risk distributions in various conditions of the chain's functioning and a
proposal of two methods of distribution of the diminishing risk of cooperation [41],
• assessment of the possibility of using collaborative games to solve operational research problems, sharing
profits in transport, storage and distribution games, and forming supply chains [2],
• the benefits of sharing information on demand in a collaborative and competitive environment in a single
supplier and one retailer supply chain, considered in different decision-making modes [37],
• distribution of profits in the supply chain in relation to the promotional activities undertaken using the Nash
and Stackelberg equilibria and searching for the effective point in the Pareto sense [1].
• presentation of the negotiation process, coalition building and cost / benefit sharing when players have
different strengths and levels of information in the area of forestry logistics [11].
• profit sharing in a two-link supply chain consisting of one risk-neutral supplier and two risk-prone retailers
when players do not cooperate and cooperate with each other and retailers face the problem of price
sensitive stochastic demand [8],
• apply the Stackelberg theory to model and analyze a single supplier and multi-retailer supply chain system
using the supplier's inventory management method, along with presenting a general non-linear mixed model
explaining revenue sharing, wholesale and centralized pricing structures [31].
• optimization of logistics costs by modeling interactions between players in a single-channel, two-way
supply chain, paying particular attention to sharing information and forecasting demand [35],
• determining optimal decisions in two links of the supply chain, when profit sharing planning will be
extended to investment decisions and just-in-time flow coordination using the Harris or Wagner / Whitin
approach [14],
• formulation and use of multidimensional auctions as mathematical programming problems for supply chain
coordination, using a complex transaction model operating between the links of the chain [16],
• coordination of a two-link supply chain consisting of a producer and a seller with an element of joint
advertising and pricing decisions, in which the seller carries out local advertising and the producer pays part
or all of the advertising costs to the retailer, using the Stackelberg balance with asymmetric power
distribution in the game [22] ,
• planning production processes in order to minimize the functions of production and transport costs by
looking for an equilibrium point using clean and mixed strategies [26],
• application of game theory in solving the problems of a multimodal carrier whose task is to transport
perishable food products over long distances, with short deadlines and sanctions of failure to meet the
contract [29],
3992 Andrzej Rzeczycki et al. / Procedia Computer Science 207 (2022) 3988–3997
Andrzej Rzeczycki/ Procedia Computer Science 00 (2022) 000–000 5

• development of a theoretical framework for the allocation of profits as a mechanism for adapting incentives,
within the cooperation of supply chains on the example of the "beer game", using the concept of the
nucleolus of the game, indicating the superiority of the tender solution over classic alternatives [30],
• analysis of the behavior of participants in the supply chain in order to examine the possibility of
coordination through incentives, due to the occurrence of conflict situations and non-participation of players
in the network design process, using the so-called social utility [28],
• application of game theory in negotiations, in a variety of tender conditions, application cases and logistic
processes [34],
• application of game theory to present a common reconfiguration of the supply chain based on three goals:
maximizing total profit, maximizing customer utility and minimizing supply chain costs in a two-tier
structure [27],
• building a model that optimizes the retailer's sales effort, the wholesale price requested by the manufacturer,
the ecological level of the product and the selling price of the retailers [18].
• analysis of the product return function, whereby end-of-life / use products are returned to the recipient, and
a coordination mechanism based on the adoption of a mechanism (eg contract) to align the goals of the
closed supply chain participants [12].
By analyzing the decision-making processes occurring in supply chains and the hitherto achievements of game
theory in this area, four main problems can be distinguished that require consideration in the context of
rationalization using game theory:
• games to compete with entire supply chains, which can be treated as superior to those played between the
participants of the chain; allow for support in the development of the general concept of the chain, defining
its key competences and adapting it to the nature of demand and supply, and thus identifying the strategic
goals of its participants,
• games of a defined duration between two links in the supply chain (bilateral contracts). They relate to
defining the principles of cooperation with suppliers, quantitative and price discounts within the conducted
transactions, making or buy decisions and regarding the use of outsourcing; most often they are non-
cooperative games,
• non-cooperative and cooperative games, often connected with the problem of dividing the payout and with
an indefinite duration (number of repetitions) and different levels of available information, which may take
the form of an auction or a tender; within their area scope, they duplicate those indicated in bilateral
contracts, and their multilateralism causes a change in the rules, including the level of uncertainty,
• cooperative games, the main purpose of which is to establish a fair distribution of the payout, in particular
the profits made or the costs incurred; with their use, you can support decisions regarding the transport
network, the location of logistics facilities, or the distribution of inventories among participants in the
supply chain.

3. The influence of behavioral aspects on making logistics decisions in the supply chain

In order to verify the assessment of the influence of behavioral factors on making logistic decisions in supply chains,
an experiment was carried out on last year students of logistics of two Polish. Participants were informed about the
nature and form of the research being conducted, but were not informed about its purpose. One of the research areas
concerned the problem of bilateral and multilateral negotiations in the supply chain, verifying how the attitude of the
decision-maker will affect the rationality of the decision made and the willingness to cooperate. Therefore, the
conclusion also took into account the explanations of the players' behavior obtained after the experiment. The
students were asked to achieve the best possible result in bilateral negotiations, as well as make a strategic decision
regarding the make or buy problem by negotiating the terms of the contract with three suppliers.
In the first task, the players were to declare concessions regarding the profit to be achieved from the cooperation
(PLN 10,000), because the other party did not want to accept their first offer. They also received information about
the unused production capacity of their company and the growing risk of delaying signing a contract. The risk grew
by 10% each day of negotiations, which resulted in the game ending after 10 days at the latest (certainty of contract
loss). The statistical measures describing the players' behavior in the first negotiation game are presented in Table 1.
6 Andrzej
AndrzejRzeczycki / Procedia
Rzeczycki ComputerComputer
et al. / Procedia Science 00 (2022)207
Science 000–000
(2022) 3988–3997 3993

Table 1. Statistical measures describing players' behavior in the first negotiation game
Arithmetic Geometric Standard Variation Standard
Variable Min Max Variance
average mean. deviation. coefficient. error

1st day 9,7303 9,7034 7,0 10,0 0,4565 0,6756 6,9436 0,0588
2 day
nd
9,3152 9,2767 7,0 10,0 0,6566 0,8103 8,6986 0,0705
3 day
rd
8,8939 8,8157 6,0 10,0 1,2855 1,1338 12,7478 0,0987
4th day 8,5424 8,4131 5,0 10,0 1,9194 1,3854 16,2182 0,1206
5 day
th
8,2091 8,0367 4,0 10,0 2,3788 1,5424 18,7883 0,1342
6 day
th
7,9848 7,7871 4,0 10,0 2,6572 1,6301 20,4147 0,1419
7 day
th
7,7332 7,5246 3,5 10,0 2,7356 1,6540 21,3879 0,1440
8th day 7,3258 7,0323 3,0 10,0 3,6186 1,9023 25,9669 0,1656
9 day
th
7,1576 6,8226 2,5 10,0 3,9988 1,9997 27,9382 0,1741
10 day
th
7,0242 6,6771 2,0 10,0 3,8773 1,9691 28,0326 0,1714

The players approached the problem they were solving in various ways. A large part of them conducted tough
negotiations and throughout the game did not give up the assumed amount of profit, others discounted the value of
the contract proportionally to the increasing risk, and the next ones abruptly reducing the amount unevenly. The
differences in the distribution of average concessions in the last days of negotiations are starting to increase
drastically, as players, after reaching certain thresholds, were not willing to reduce their payouts regardless of the
increasing risk. This reflects the increment in the calculated variances and coefficients of variation in the response.
Additionally, a certain fixation on the problem was observed, without considering any side issues that should
influence the decision made, e.g. the level of profitability, which was known.
In the next round of the game, the participants of the study faced exactly the same problem, only the contract value
was changed from PLN 10,000 to PLN 10 million. The statistical measures describing the behavior in this round of
the game are presented in Table 2.

Table 2. Statistical measures describing players' behavior in the second negotiation game
Standard Variation
Arithmetic Geometric Standard
Variable Min Max Variance deviation coefficient
average mean. error
. .
1st day 9,8909 9,8871 9,0 10,0 0,0723 0,2689 2,7182 0,0234
2 day
nd
9,5000 9,4873 8,7 10,0 0,2412 0,4911 5,1699 0,0427
3 day
rd
9,1167 9,0704 7,0 10,0 0,8138 0,9021 9,8954 0,0785
4 day
th
8,8061 8,7340 7,0 10,0 1,2152 1,1024 12,5184 0,0959
5th day 8,6327 8,5271 6,0 10,0 1,6814 1,2967 15,0208 0,1129
6th day 8,4109 8,2429 5,0 10,0 2,4344 1,5602 18,5503 0,1358
7 day
th
8,1015 7,8367 4,0 10,0 3,4773 1,8648 23,0174 0,1623
8 day
th
7,9552 7,5398 3,0 10,0 4,6929 2,1663 27,2315 0,1886
9th day 7,6394 7,0258 2,0 10,0 5,9493 2,4391 31,9281 0,2123
10th day 7,4061 6,5985 1,0 10,0 6,3542 2,5207 34,0363 0,2194

In the second case, the players were less likely to give up the assumed earnings, despite the risk. This behavior was
indicated by both the arithmetic and geometric mean, only on the last day the geometric mean in the second game
was lower than the first, so more players gave up to earn any of this sum before the game was over. In the first two
days, no one yielded more than PLN 1.3 million, while in the first game, the most non-conflicting players were
3994 Andrzej Rzeczycki et al. / Procedia Computer Science 207 (2022) 3988–3997
Andrzej Rzeczycki/ Procedia Computer Science 00 (2022) 000–000 7

willing to concede by 30% of the amount on the first day. This situation is also observable in the distribution of the
coefficients of variation, in which higher values (in the second game) do not appear until the third day. It was then
that many players started using a risk proportional bid strategy. Also in this game, there were some players who did
not fully yield to the negotiations.
In the third version of the game, the assumed profit was still PLN 10 million, but the players were informed that the
indicated risk level was overstated (the opponent's bluff), in fact it was much lower (but not specified). The
statistical measures describing the behavior of players in the third negotiation game are presented in Table 3. In the
third case, the average negotiated amount increased drastically, especially in the last days of bidding. This is
confirmed by over a half lower value of the variance on the tenth day and by over 40% lower value of the coefficient
of variation on that day than in the case of the second game. It should be noted, however, that even in the case of
such information, there were also players much more retiring, but they did not lower the possibility of achieving the
desired earnings below half, until the last game. Only the vision of ending the game without an agreement and the
loss of the entire potential contract made them make much larger concessions.
Table 3. Statistical measures describing players' behavior in the third negotiation game
Standard
Arithmetic Geometric Variation Standard
Variable Min Max Variance deviation
average mean. coefficient. error
.
1st day 9,9394 9,9372 9,0 10,0 0,0421 0,2052 2,0644 0,0179
2 day
nd
9,8485 9,8420 8,5 10,0 0,1198 0,3461 3,5140 0,0301
3 day
rd
9,7591 9,7469 8,0 10,0 0,2213 0,4704 4,8203 0,0409
4th day 9,5758 9,5541 7,5 10,0 0,3848 0,6203 6,4776 0,0540
5 day
th
9,3948 9,3595 7,0 10,0 0,6023 0,7761 8,2608 0,0676
6 day
th
9,2958 9,2524 7,0 10,0 0,7393 0,8598 9,2495 0,0748
7 day
th
9,0379 8,9739 6,0 10,0 1,0438 1,0217 11,3044 0,0889
8th day 8,9248 8,8225 5,0 10,0 1,5277 1,2360 13,8490 0,1076
9 day
th
8,8424 8,7270 5,0 10,0 1,7472 1,3218 14,9486 0,1150
10 day
th
8,4606 8,1762 2,0 10,0 3,0479 1,7458 20,6347 0,1520

The last version of the negotiation game has been reduced to an ultimatum, in which the opponent offers PLN 5
million on the second day or threatens to terminate the contract. Players could agree to a split or propose their own,
knowing that there would be no next round. The presented offer could only be accepted or not. As a result, 18.18%
of respondents agreed to the offered ultimatum terms, the rest (81.82%) decided to submit a counter-proposal in the
range from PLN 6 to 9 million. The vast majority wanted (as the respondents themselves noted during the closing
session) to divide the difference in offers in half, or possibly offered a slightly lower amount than PLN 7.5 million to
show the so-called goodwill.
Another decision-making situation being played was the make or buy problem. The students were to decide not only
whether they produce the product themselves, but also, in the case of purchase, from which the suppliers obtain the
goods (the product quality level was constant). The first situation gave practically the same profits in every situation.
Both self-production and purchase from the first and third suppliers guaranteed a profit for the buyer of 6 million.
Only the choice of the second supplier resulted in lower payouts for the buyer, played by the player. When making
choices, 30.3% of respondents decided to manufacture the product on their own, having control over the process,
another 30.3% bought the product from the first supplier with the profit sharing 6: 2, and 23.5% from the third
supplier with the 6: 3 division. When discussing the game, the students indicated that they chose to buy in order to
focus on other aspects of the business (without losing profit), but also to "make others earn", not being guided by
economic rationality, but by a certain degree of altruism. In the second version of the make or buy game, the profit
distribution has been changed so that the best economic results can be obtained by producing the product on its own
or by handing over the production to the first supplier. Despite such a situation, the number of players producing the
product on their own decreased (by 3 percentage points), the choice of the first supplier was made by 47.7% of
participants, and the number of quasi-altruists significantly decreased (to 3.8%), increasing the cooperative's profits
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at the expense of their own result. In the third version of the make or buy game, the participants had full freedom in
negotiating the distribution, however, only in the case of 9.1% of players obtained by them the result was better than
the previously proposed one, and the choices were largely determined by non-economic factors.
Problems related to maladjustment of human behavior to theoretical assumptions are also reported by other
experimental studies conducted. For example, experimental studies on the prisoner's dilemma in economic behavior
conducted at the University of Warsaw [23] showed that in 75% of cases the lack of business cooperation is mainly
due to the betrayal of the principle of cooperation at the outset. The reason for breaking off further cooperation was
the desire to protect oneself and the lack of trust, which, even in the case of an attempt to compensate the resulting
loss in subsequent rounds, led to a continuous deterioration of relations and the size of the payments obtained.

4. Conclusions

Game theory is a multifaceted field, the research apparatus of which has the potential to broadly apply to the analysis
of conflicts occurring in supply chains in relation to efficiency, especially in the area of trade negotiations,
contracting and the distribution of payouts (profits, costs, etc.). The use of game theory in making logistic decisions
in supply chains allows for the rationalization of the economic account of these chains by estimating and indicating
decision-making paths ensuring an increase in profits, a decrease in costs or an improvement in resource
management. Achieving such results is possible thanks to a thorough analytical procedure, taking into account the
player's behavior, which allows for a more precise estimation of the probability of events, and even (under favorable
conditions) creating the behavior of game participants. Rationalization can be achieved both internally and externally
of an organization. However, there are some differences in the approach to gaming here. On an internal level, games
are less complicated, as they usually involve fewer players and the actions are subordinated to a general strategic
concept. The external level is regulated by relationships of various nature, and the heterogeneous goals of the chain
participants and the way the chain is perceived by individual managers increase the number of likely interactions.
The input elements of the game are therefore the type of player, the game environment and its rules. These elements
are, in principle, constant during the game, but in practice, to a limited extent, modifiable, and they certainly
condition the legitimacy of starting the game. This is especially true for the type of player, which can bring clear
economic benefits. Assigning to the manager (player) an appropriate decision scope (games) allows to maximize
(rationalize) the results of these decisions, however, it depends on the character of the player himself, e.g. the
"pragmatist" player has better predispositions to design cost strategies, and the "politician" player prefers a pro-
quality approach due to to lower ability to find sources of cost reduction. The player can also influence the game
environment, e.g. by modifying it in terms of time. Speeding up the cycle can create new value, disrupting the
opponent's actions. Thus, due to the significant influence of the type of player on the choice of logistics strategy and
the results achieved, an extremely important issue is the possibility of identifying these types, their standardization
and operationalization in games.
It can be concluded that the applicability of game theory in modeling complex problems is limited due to the large
variety of possible conflict situations (rules and payment functions) and approaches to solving them developed in
game theory. The existing strong behavioral aspects introduce multifaceted information disruptions to games. The
level of applicability of game theory increases for iterative games in which the conditions remain unchanged. Thus,
game models, explaining behavior and indicating additional opportunities for action, constitute the basis for
changing the current perspectives in the perception of problems in the supply chain and the precise identification of
emerging opportunities. The practical application of game theory to the analysis of decision problems makes it
possible to eliminate irrelevant alternatives, which take the form of relatively constant results, with changing rules of
the game. In other words, the application of game theory allows for a proper understanding of the strategic structure
of the situation.
The manager's perception and competences determine his strategic choices, becoming a microfoundation of the
strategy and a manifestation of the representation of the network environment. The cognitive deficiencies and
limitations of the decision-maker result in selective seeing of the environment, and this vision directs its subsequent
actions. Thus, the study of the representation of the environment, which shapes the rules of decision-making games,
is of key importance for understanding strategic choices. As the game size increases, so does the number of expected
Nash equilibria. The introduction of an algorithm to games to generate approximate solutions will significantly
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increase the complexity of the problems that can be considered. However, limiting the set of active strategies for
individual players is very important from the point of view of the perceptual and analytical capabilities of a single
player. The decision-maker analyzes the environment, identifying opportunities and threats related to the uncertainty
of functioning in his decision-making area. Acting in accordance with his goals, as well as knowledge and
experience, he visualizes the result, and thus assesses his strategic (negotiating) position towards other players. On
this basis, taking into account the built strategy framework and relations (cooperation, competition, control), it seeks
opportunities and makes decisions.

Acknowledgements

The project is financed within the framework of the program of the Minister of Science and Higher Education under
the name „Regional Excellence Initiative” in the years 2019 – 2022; project number 001/RID/2018/19; the amount
of financing PLN 10,684,000.00.

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