What’s Game Theory got to do with Selling Travel?

As explained in Wikipedia, “Game theory is the study of mathematical models of strategic interactions among rational agents. It has applications in all fields of social science, as well as in logic, systems science and computer science. The concepts of game theory are used extensively in economics as well.”

Said a little more plainly, game theory studies interactive decision-making, where the outcome for each participant or “player” depends on the actions of all. The interesting cases are when a group of people must decide to cooperate with each other or not given the possible outcomes. A commonly used example is multiple people are arrested for a crime. If no one talks, they may all get a light sentence as the authorities don’t really know who did what (lack of hard evidence). However each individual may decide to inform on everyone else. They would get no sentence and the rest get a harsh one. If everyone informs on everyone else, they all get a harsh sentence. Game theory is predicting who will do what and why.

How does this relate to travel retail? Currently travel providers and channels are creating bespoke APIs for retail that do pretty much the same as everyone else (shop, book, pay, ticket/entitlement). They could choose to cooperate on the non-competitive, technical, aspects of API development and delivery, such as taxonomy, syntax, message structure, callback functions, query methods, etc..

They could choose to use organisations like OpenTravel and TTI to create common use reference implementations to be shared by all. This would greatly lower the API production and consumption costs for all. This would not affect product, price or rules which can be unique per implementation but following a common architecture, it could actually enhance ones ability to compete as the money saved on redundant low level API work could be used for product and personalisation improvements.

However the industry does not cooperate where it makes sense. There remains a long standing notion that it is somehow an advantage to have APIs that are different from everyone else. Harder to adopt, hence harder to change partners, aka vendor lock in. That somehow their own staff, on their own, can create better APIs than anyone else and that will make a difference. That somehow offloading everything to a service provider will make them more competitive. That service provider would use their own bespoke APIs (lock in) across multiple travel companies but also the same product, price and rule capabilities. That latter being a concern for a travel provider as they may be limited on how they can differentiate their product.

Currently in travel retail, no one cooperates with anyone else. They all see the worse outcome, they all get a harsh sentence meaning high IT costs. Loads of redundant effort and APIs that make selling across channels or partnering to promote each other’s product extremely painful. If there was ever a time to take two steps back and use game theory to examine how cooperation may benefit all, it is now.

The industry is moving towards shared nothing architecture in order to leverage cloud computing (beyond simple hosting) and what truly distributed personalized retail could look like. Doing that in a bespoke way company by company won’t work. Reach out to OpenTravel at https://opentravel.org/contact-us/ if you want to dig deeper into how cooperation would work.

Content By: Stu Waldron, Open Travel. (https://lnkd.in/d6FrRSTs)