This article is a member of the template "I am a consultant in X methodology. While X methodology is never wrong, it sometimes fails because of Y. For those of you who don't know what Y is because you did not read the two sentence explanation of it that I did when Malcom Gladwell covered the topic better, it is Insert Wikipedia Definition. This means Non-Sequitur, Semi-Sequitur, and Tangentially Related Thought. X is awesome, please hire me."
Edited to add:
On reflection, that might sound excessively snarky. OK, backing it up: Nash equilibria do not speak to system-wide improvements, at all. The point of the game is that players get their own payoffs rather than getting any value from the sum-of-all-players payoff. The insight from Nash equilibria is that they can't move to a higher payoff for themselves because it requires simultaneous cooperation, which is difficult for some games.
Nash equilibira do not attempt to answer the question "Why do organizations not want to cease to exist?" That isn't a very hard question in game theory -- most players are generally assumed to not desire annihilation. The problem isn't that you're stuck at a Nash equilibrium -- the problem is that an organization does not desire annihilation. Its like doing a game theory analysis of my salary negotiation with my employers and saying "Hmm, Patrick doesn't appear to be taking the negotiation tactic 'Shoot self in head'". That doesn't imply that my employers and I are at a Nash equilibrium, in fact, there could be multiple mutually rewarding paths from our current strategies. Its just that none of them involve me shooting myself in the head.
This is the norm in many enterprise shops that I've worked with. IT sets a rate that they "charge" their business-side "clients". The rate is set by some formula that takes into account space, equipment, and other administrative overhead.
However I don't see how it follows that they have issues because of it. Why do you think so?
Edited to add:
On reflection, that might sound excessively snarky. OK, backing it up: Nash equilibria do not speak to system-wide improvements, at all. The point of the game is that players get their own payoffs rather than getting any value from the sum-of-all-players payoff. The insight from Nash equilibria is that they can't move to a higher payoff for themselves because it requires simultaneous cooperation, which is difficult for some games.
Nash equilibira do not attempt to answer the question "Why do organizations not want to cease to exist?" That isn't a very hard question in game theory -- most players are generally assumed to not desire annihilation. The problem isn't that you're stuck at a Nash equilibrium -- the problem is that an organization does not desire annihilation. Its like doing a game theory analysis of my salary negotiation with my employers and saying "Hmm, Patrick doesn't appear to be taking the negotiation tactic 'Shoot self in head'". That doesn't imply that my employers and I are at a Nash equilibrium, in fact, there could be multiple mutually rewarding paths from our current strategies. Its just that none of them involve me shooting myself in the head.