Cooperation and partnering in facilities construction - empirical application of prisoner's dilemma

Purpose - To investigate if game theoretic reasoning may be used to explain a lack of cooperation in buyer-supplier relationships within construction and facilities management. In order to make an empirical application of the prisoner's dilemma (PD) game, possible important variables are operationalized and empirically measured. Design/methodology/approach - Empirical data concerning pay-offs and the variables in the discount parameter formula (created in this paper) have been obtained through interviews with clients and contractors in the Swedish construction sector. Findings - This paper suggests a way to operationalize pay-offs and the discount parameter, making empirical measurements possible. Owing to differences in pay-offs and the discount parameter, different forms of contracts will affect cooperation. Cumulative values of cooperation are much higher in lasting relationships than in occasional transactions. Thus, the best way to facilitate cooperation between rational players is long-term contracts. Research limitations/implications - Since, the values used are based on empirical data collected from a few respondents, they should be viewed as illustrative empirical examples, rather than statistical generalizations. Practical implications - From a game theoretic perspective the practice of project partnering may not solve problems regarding lack of cooperation. To increase the incentives for cooperation, the actors should work together in long-term relationships instead of focusing on single projects. Long-term strategic partnering is, therefore, beneficial for the construction and management of facilities. Originality/value - This paper makes empirical application of the PD game possible by operationalizing and empirically measuring game theoretic variables that previously have been given values set by the researcher rather than by the players in the game.