March 12 (Thursday) (10:00-11:00) room C.510 (new building, 5th floor)
Tri-Dung Nguyen (University of Kent, United Kingdom)
Game of banks – biform game theoretical framework for ATM network cost sharing
Automated teller machines (ATM) play a major role in the world economy as they enable financial transactions and hence good exchanges and consumption. ATM transaction fees are incurred to cover the cost of running the network and these are often settled among the members including banks and cash machine operators. In this paper, we develop a novel biform game theoretic model for members to optimally invest in the ATM network and to share the cost. This biform game includes both a cooperative game theory mechanism for interchange fee sharing and a non-cooperative counterpart to model the fact that members also wish to maximize their utilities. While the proposed coopetition framework is applicable to general ATM networks, we focus the case study on the UK ATM network thanks to the accessibility of the data in addition to the notable stability issues that the network is currently experiencing as has been widely featured by the mainstream media. On the technical side, we prove the existence of a pure Nash equilibrium, which can be computed efficiently. We also show that, under some settings, the Shapley allocation belongs to the core and hence it is not only fair to all members but also leads to a stable ATM network. In addition, we show that the Shapley value allocation dominates the current mechanism in terms of social welfare. Finally, we provide numerical analysis and managerial insights using real data on the complete UK ATM network.
Speaker’s Bio: Tri-Dung Nguyen is a Professor of Business Analytics at Kent Business School. He obtained his PhD in Operational Research from the Massachusetts Institute of Technology (MIT), USA, in 2009. From 2010 onwards, he served as a Lecturer and later as an Associate Professor in Operational Research and Management Science at the University of Southampton. Prior to this, he was a Visiting Research Assistant Professor at the University of Illinois at Urbana–Champaign, USA. His areas of expertise include Game Theory (supported by an EPSRC Fellowship focusing on large-scale and uncertain cooperative games), general Operational Research methodologies (particularly optimisation under uncertainty), and robust statistical analysis, among others. In addition to his academic career, Dr Nguyen has worked in the financial sector (including Credit Suisse and Fidelity) and in the IT industry (Fujitsu Siemens).