MIT SDM deals with the prisoner's dilemma

This looks really fascinating for those of us interested in how incentives do or do not work:

Systems Thinking and the Inevitability of the Dreamliner Delays

MIT SDM Systems Thinking Webinar Series

Yao Zhao, Ph.D.
Associate Professor, Rutgers University

Date: December 2, 2013
Time: Noon – 1 p.m. EDT
Free and open to all

Register

 

About the Presentation

 

Although the Boeing 787 Dreamliner was the fastest-selling plane in the history of commercial aviation, its development was a nightmare. The first flight was delayed by 26 months, and the first delivery was 40 months overdue with a cost overrun of at least $10 billion. Using the results of a comprehensive empirical study of the actual events and facts, this webinar will discuss strong evidence suggesting that the majority of delays were intentional.

 

Dr. Yao Zhao will:

• Describe a mathematical modeling and analysis of economic drivers in joint development programs that showed the 787's risk-sharing arrangement forced Boeing and its partners to share the "wrong" risk. This led each partner into a "prisoner's dilemma" wherein delays were in the best interests of the firms even while they were driving themselves into disaster;
• Discuss the reconciliation of the analysis with empirical evidence, which reveals the rationale behind many seemingly irrational behaviors that delayed this program; and
• Suggest a new "fair sharing" partnership to share the "right" risk and greatly alleviate delays for development programs of this kind in the future.