WASTE MINIMIZATION USING GAME THEORY AND

SYSTEM DYNAMICS

COURSE NAME - IE 694

KRISHNA GUPTA
183190014
IEOR , IIT BOMBAY
INTRODUCTION
● Evolution game for decision making between government and
contractor for waste minimization.
● Model on decision behaviors to determine appropriate value
on penalties.
● the mathematical criteria of evolutionary game theory can be
applied to forecast the results of competing strategies and
evolutionary game theory also focuses more on the dynamics
of strategy changes (Smith and Price, 1973).
● Long term dynamic process of gradual observation learning
and adjustment game.
GAME THEORY APPROACH
MODEL 1
Model hypotheses
● Government department choose supervision based on
expected revenue from supervision.
● μ = 0 no supervision μ = 1 full scale supervision.
● λ = probability of illegal dumping.
● If contractors violate the rules, governments will
impose a fine(F)
● , αF (0<α<1) will be revenue for the government
administration.
MEANING OF PARAMETERS
● B normal revenues of government management
departments
● C supervision cost of government management
department
● b main income of contractors.
● e benefits from illegal dumping of contractors
● D damage caused to the society by illegal dumping
INCOME MATRIX

CONSTRUCTION CONTRACTOR
ILLEGAL DUMPING LEGAL DUMPING
GOVERNMENT
SUPERVISION B-C+ αF-D, b+e-F B-C,b
NON SUPERVISION B-D, b+e B ,b
EXPECTED VALUES
FOR CONTRACTORS

● E1 = b +e – μF expected return from illegal dumping

● E2 = b expected revenue from legal-dumping
● E(C1) = λ E1 + (1- λ) E2 (1)
FOR MANAGEMENT DEPARTMENT

● E3 = λ αF - λD + B - C expected return from supervision

● E4 = - λD + B expected revenue from not supervision
● E(M1) = μ E3 + (1- μ) E4 (2)
GAME EQUATIONS
● The replicated dynamic game equations of contractors
and government departments are constructed in Eq.
(3) and Eq. (4), respectively.
● H ( λ) = (λ) (1- λ)(μF – e ) (3)
● G(μ) = (1- μ) (μ)(C – λαF) (4)
● possible stable points of contractors (λ = 0,1 and μ =
e/F)
● possible stable points of management department (μ
= 0,1 and λ = C /αF)
STABLE POINTS CONDITION
● the possible stable points should meet the following
conditions to become an evolutionary stable strategy
( dH ( λ) / d λ<0)
dG(μ) /dμ)<0
● dH ( λ) / d λ = (2λ-1)(μF – e ) (5)
● dG(μ) /dμ) = (2μ-1)(C – λ αF) (6)
ANALYSIS OF DECISION BEHAVIOR
CONTRACTORS
● when F >= e and μ = e/F there H ( λ) = 0 all λ stable
points values not Meeting condition of evolutionary
stable strategy .
● when F >= e and μ > e/F λ = 0 stable strategy legal
dumping .
● when F >= e and μ < e/F λ = 1 stable strategy illegal
dumping.
● when F < e and μ < e/F λ = 1 only stable strategy
illegal dumping
DECISION OF CONTRACTORS(NO PUBLIC
PARTICIPATION)

FIG.1 REF[1]
ANALYSIS OF DECISION BEHAVIOR OF
MANAGEMENT(GOVERNMENT) DEPARTMENT
● when C <= αF and λ = C /αF there G(μ) = 0 all μ stable
points values not Meeting condition of evolutionary
stable strategy .
● when C <= αF and λ > C /αF , μ = 1 stable strategy legal
dumping .
● when C <= αF and λ < C /αF , μ = 0 stable strategy
illegal dumping.
● when C > αF and λ < C /αF , μ = 0 only stable strategy
illegal dumping
DECISION OF GOVERNMENT
DEPARTMENT(NO PUBLIC PARTICIPATION)

FIG2 REF [1]

GAME MODEL 2
WITH PUBLIC PARTICIPATION
Hypotheses
● ξ probability of public participation in reporting
illegal-dumping.
● X The losses of contractors due to illegal-dumping
with public participation in supervision.
● Y The losses of government departments due to failing
to perform their supervisory duties with public
participation.
● No public report no influence on them
GAME TREE WITH PUBLIC
PARTICIPATION

FIG 3 REF[1]
EXPECTED VALUES (WITH PUBLIC
PARTICIPATION)
FOR CONTRACTORS

●
E5 = b +e – μF - ξX expected return from illegal dumping
● E6 = b expected revenue from legal-dumping
● E(C2) = λ E5 + (1- λ) E6 (7)

FOR MANAGEMENT DEPARTMENT FIG 3 REF[1]

● E7 = λ αF - λD + B - C expected return from supervision

●
E8 = - λD + B - ξY expected revenue from not supervision
● E(M2) = μ E7 + (1- μ) E8 (8)
GAME EQUATIONS
● The replicated dynamic game equations of contractors
and government departments are constructed in
Eq. (9) and Eq. (10) respectively.
● H ( λ) = (λ) (1- λ)(μF – e + ξX ) (9)
● G(μ) = (1- μ) (μ)(C – λαF + ξY) (10)
● possible stable points of contractors (λ = 0,1 and μ = e
- ξX /F)
● possible stable points of management department (μ
= 0,1 and λ = C - ξY /αF)
STABLE POINT CONDITION
● the possible stable points should meet the following
conditions to become an evolutionary stable strategy
( dH ( λ) / d λ<0)
● dG(μ) /dμ)<0
● dH ( λ) / d λ = (2λ-1)(μF – e+ ξX ) (11)
● dG(μ) /dμ) = (2μ-1)(C – λαF- ξY) (12)
ANALYSIS OF DECISION BEHAVIOR
CONTRACTORS
● when F >= e - ξX and μ = e - ξX /F there H ( λ) = 0 all
λ stable points values not Meeting condition of
evolutionary stable strategy .
● when F >= e -ξX and μ > e-ξX/F λ = 0 stable strategy
legal dumping .
● when F >= e-ξX and μ < e-ξX/F λ = 1 stable strategy
illegal dumping.
● when F < e-ξX and μ < e-ξX/F λ = 1 only stable
strategy illegal dumping
DECISION OF CONTRACTORS(NO PUBLIC
PARTICIPATION)

FIG4 REF[4]
DECISION OF CONTRACTORS(WITH
PUBLIC PARTICIPATION)
● when C <= αF+ξY and λ = C-ξY /αF there G(μ) = 0 all
μ stable points values not Meeting condition of
evolutionary stable strategy .
● when C <= αF +ξY and λ > C-ξY /αF , μ = 1 stable
strategy legal dumping .
● when C <= αF +ξY and λ < C-ξY /αF , μ = 0 stable
strategy illegal dumping.
● when C > αF+ξY and λ < C-ξY /αF , μ = 0 only stable
strategy illegal dumping
DECISION OF GOVERNMENT
DEPARTMENT(NO PUBLIC PARTICIPATION)

FIG5 REF[1]
COMPARISON OF RESULTS
GOVERNMENT DEPARTMENT
● Without public participation
S(1) = E(3) – E(4) = λ αF – C
● With public participation
S(2) = E(7) – E(8) = λ αF – C +ξY

FIG[6] REF[1]
COMPARISON OF RESULTS AND
CONCLUSION
CONSTRUCTION CONTRACTORS
Without public participation
S(3) = E(1) – E(2) = e – μF
With public participation
S(4) = E(5) – E(6) = e – μF – ξX

FIG 7 REF[1]

CONCLUSION public participation beneficial for Environment as well as

government.
WHAT CAN DO WE DO ? – exact relationships,more realistic model(recycling waste)
SYSTEM DYNAMIC APPROACH
● Problem to minimize waste disposal charging
fee(WDCF)
OBJECTIVES
● Reduce waste generation and land filling.
● Maximize the waste recycling.
● Minimizing the waste dump(inappropriately).
BASIC CAUSAL LOOPS
LOOP 1 LOOP

LOOP3 LOOP
CAUSAL LOOP DIAGRAM

FIG1 CASUAL LOOP DIAGRAM OF

MODEL REF[3]
STOCK FLOW DIAGRAM

FIG 2 STOCK FLOW DIAGRAM OF THE MODEL

REF[3]
MODEL TESTING

FIG3 EXTREME CONDITION TEST

REF[3]
RESULTS

FIG 4 RESULT FROM

SIMULATION
CONCLUSION
● Government cannot set price as high as they
want there should be optimal price.
WHAT CAN WE DO IN FUTURE ?
Relationships between cause and effect can be
more clear.
More practical data and variables can make
model more realistic.
REFERENCES :
Ref[1]Considerations for better construction and demolition waste
management: Identifying the decision behaviors of contractors and
government departments through a game theory decision-making model
https://doi.org/10.1016/j.jclepro.2018.11.262
https://www.sciencedirect.com/science/article/pii/S095965261833
6655#bib30

Ref [2] https://plato.stanford.edu/entries/game-evolutionary/

Ref [3] A system dynamics model for determining the waste disposal
charging fee in construction
https://doi.org/10.1016/j.ejor.2014.02.034
https://www.sciencedirect.com/science/article/pii/S037722171400
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