Serious Games for Improved Defense Contracting by Roi John Guinto B.S. Mechanical Engineering and Physics Rutgers University, 2012 Submitted to the Engineering Systems Division in Partial Fulfillment of the Requirements for the Degree of Master of Science in Technology and Policy at the MASSACHUSETTS INSTITUTE OF TECHNOLOGY June 2014 @ 2014 Massachusetts Institute of Technology. ARCHIVU All Rights Reserved. IMASSACHUSETTS INST OF TECHNOLOGY MAY 2172014 BRARIES Signature redacted Signature of Author Technology and Policy Program Engineering Systems Division May 23, 2014 Signature redacted Certified by Olivier de Weck Professor of Aeronautics and Astronautics and Engineering Systems Thesis Supervisor Sig nature redacted Accepted by Dava ewman Professor of Aeronautics and Astronfutics and Engineering Systems Director, Technology and Policy Program I E -2- Serious Games for Improved Defense Contracting by Roi Guinto Submitted to the Engineering Systems Division on May 23, 2014 in Partial Fulfillment of the Requirements for the Degree of Master of Science in Technology and Policy Abstract Gaming has been explored as a research technique in complex systems to explore human interactions within technical domains. These so-called "serious games" are designed for purposes outside of pure entertainment and are intended to help researchers engage with qualitative data that focuses on human behavior. This thesis focuses on a research game called ColumBID which was designed for the Production in the Innovation Economy shipbuilding study. This game seeks to understand the negotiation process in defense contracting and is used to facilitate and record the participants' movement through the tradespace. From a game theory perspective, we analyzed the non-Pareto dominant movements through the tradespace and found that humans explore the space by sliding along fronts until they reach an optimal and then jumping to another front to negotiate another optimal point. The players then compare these optimal points to simplify the multi-variable optimization. We found that an 8% contract price improvement in the competitive case compared to the monopolistic case. This thesis recommends that serious research game design focus on questions about the process rather than the endgame optimization. Thesis Supervisor: Olivier L. de Weck Title: Professor of Aeronautics and Astronautics and Engineering Systems -3- -4- Acknowledgments My parents have always encouraged me to avoid letting school get in the way of my education. From a very young age, they were always willing to let me learn through games, whether or not they were explicitly educational. They never questioned why it was so important for me to reach the next save point, yell at that blue shell, slay the dragon, and keep going for one more turn. None of this work would be possible without my parents trusting that the countless hours I've spent offline and online playing with friends near and far were worth something. Thank you for always supporting me. I also thank those faraway friends for helping out whenever I needed a break from MIT life. Extra special thanks to Joe, Chris, and Tony for remote playtesting, and to Jamie for bringing my game concepts to life with her art. MIT has given me two of the happiest years of my life. It starts with my advisor, Olivier de Weck, and the Strategic Engineering Research Group. From day one, they've given me a home base in the warmest sense of the word. Oli has given me incredible freedom to pursue serious games from the start and trust to make my own decisions about the direction that I've taken this research. Everyone in SERG has always been willing to help playtest ideas and has been invaluable for feedback throughout this research process. Thanks to Ross, Sydney, Paul, Koki, Ioana, Chaiwoo, Andrew, Sung, Margaret, Narek, Patricia, Amanda, and Kaushik. Special thanks to Paul Grogan for being a fantastic mentor on everything from game design, to bike shopping, to class selection and settling into Cambridge. Whatever university is lucky enough to land you is going to get not only a great researcher, but a great human being as well. This research was made possible through the support of Mr. Sean Stackley and his team in Research, Development and Acquisition. This extension to the Production in the Innovation Economy study is funded by U.S. government contract No. N00014-09-D-0584, subcontract number 2013-432. Mr. Stackley's team has provided great resources in leaming about the shipbuilding process through visits at the Pentagon and the Navy Yard, as well as through continued remote support with the assistance of Capt. Jim Weiser and Capt. Casey Moton. There was also support from Mr. Kevin Carpentier and his group at SCRA in South Carolina, as well as from Capt. Mark Thomas and the 2N program here at MIT. They were instrumental in reaching out to contacts in shipyards around the country as well as providing their own team support in data collection. I received tremendous help from our program manager Dr. Eric Rebentisch, who provided great insight into the research process and his experience in defense contracting. -5- It is a privilege to support brave men and women in the U.S. military like my grandfather, Col. Joven Villanos, who has sparked my interest in science for as long as I can remember. There are countless other research groups at MIT and the surrounding Boston area that have welcomed me with open arms and have been invaluable in learning about research games. I thank Philip Tan and the MIT Game Lab for being an excellent sounding board on game design as well as introducing me to many people around the institute and beyond. I had the privilege of designing and teaching a course on research games and they were a tremendous resource for its creation and execution. I thank both Konstantin Mitgutsch of the MIT Game Lab and Leah Stokes of the MIT Science Impact Collaborative who both allowed me to study their design documents for their own research games and gave me frameworks for creating my own. I was fortunate to have the opportunity to learn from Eric Klopfer, Scot Osterweil, and Jason Haas from the Education Arcade about educational game development and deployment. It was a dream come true to meet the designers of some of my favorite childhood games. I could never have imagined that they would be willing to help me design my own course and develop my own games. Thanks as well to Todd Schenk of the Science Impact Collaborative, Amy Robinson of the EyeWire team, Ari Epstein from the Terrascope project, Adam Ross from the Systems Engineering Advancement Research Institute, T.L. Taylor from the Comparative Media Studies department, Eric Gordon from the Emerson Media Arts department, and Casper Harteveld from the Northeastern Game Design department for participating in the research game course. It was a joy to listen to game researchers around the area working in so many different fields. Above all, the people who have shaped my MIT experience the most are the gals and guys of the Technology and Policy Program. You can always find difficult courses and interesting research projects wherever you may choose to study, but I think what sets TPP apart is the wonderful cast of characters you'll meet. Many hours have been spent getting help from Ed, Barb, Frank, Joel, and Dava and the rest of the core faculty. The cohorts of 2013 and 2015 have been fantastic as well, but there's no group quite like my friends known as TPP '14. We like to say that your acceptance into TPP comes with a support system of 40 friends built right in. They've helped me countless times with economics, offered to join my playtesting, taught me about energy policy, abused my curveball in kickball, and always supported me mentally and emotionally. In short, you're the best group of friends I could ask for. -6- Table of Contents Acknowledgments 5 List of Figures 9 List of Tables 10 Chapter 1 - Introduction 11 11 1.1 Research Framework 1.1.1 Research Questions 11 1.1.2 Research Methods 12 12 1.2 Thesis Overview Chapter 2 - Background and Motivation 15 2.1 Commercial Games 15 2.2 Serious Games 17 2.2.1 War Games 18 2.2.2 Urban Design Games 20 2.2.3 Educational Games 21 2.2.4 Management Games 24 2.2.5 Policy Games 26 2.3 Naval Acquisitions 27 2.4 Research Motivation 29 Chapter 3 - Model Design 31 3.1 Reality 34 3.1.1 Flexibility 35 3.1.2 Fidelity 35 3.1.3 Validity 36 37 3.2 Meaning 3.2.1 Purpose 38 3.2.2 Strategy 38 42 3.3 Play 3.3.1 Systems of Information 43 3.3.2 Game Theory Systems 44 3.3.3 Systems of Conflict 46 -7- 3.3.4 Play of Simulation 47 3.4 Final Design 47 Chapter 4 - Analysis 53 4.1 Monopolistic Case 54 4.2 Competitive Case 61 4.3 Differences Between Cases 62 Chapter 5 - Implications & Future Work 65 5.1 Case Study Implications 65 5.2 Game Design Implications 66 5.3 Future Work 67 5.3.1 Supply Chain Expansion 68 5.3.2 Congress as a Player 69 5.3.3. Cost-Plus Contracting 70 5.3.4 Multiple Contracts 70 5.3.5 Further Qualitative Analysis 71 Appendix A - Interview personnel records 72 Appendix B - Aggregate sample demographics 74 Appendix C - COUHES Materials (Survey, Consent Form) 78 References 85 Gameography 89 -8- List of Figures Figure 1 - Thesis roadmap 13 Figure 2 - Evolution of serious games 18 Figure 3 - Wargaming team positions 19 Figure 4 - Screenshot of SimCity 21 Figure 5 - Screenshot of Civilization 111 22 Figure 6 - List of management games 25 Figure 7 - Annual shipbuilding rates 28 Figure 8 - Key stakeholder drivers 32 Figure 9 - Triadic game design framework 33 Figure 10 - Functional decomposition of games for supporting policy 38 development Figure 11 - Twine developer interface 41 Figure 12 - Player briefing interface 48 Figure 13 - Spreadsheet tool interface 50 Figure 14 - Monopolistic price results 54 Figure 15 - Communications vs. price 56 Figure 16 - Tradespace quadrants in negotiation 57 Figure 17 - Representative negotiation 58 Figure 18 - Construction of overall Pareto front 59 Figure 19 - Evolution in block cost space 60 Figure 20 - Competitive price results 61 Figure 21 - Case price comparisons 63 Figure 22 - Currently existing game variants 67 Figure 23 - Supply chain expansion variant 68 Figure 24 - Congress as a player variants 69 -9- List of Tables Table 1 - Chicken & hawk-dove game payoff matrix 44 Table 2 - Resulting final contracts for the 37 negotiations 53 Table 2 - Representative data set 56 -10- Chapter 1 - Introduction 1.1 Research Framework "Through play, we encounter challenges with delight, we brave overwhelming odds with hope, and we conquer our world with imagination. Play, as expressed in games, is the most positive response of the human spirit to a universe of uncertainty." - MIT Game Lab This research framework combines the best research game techniques developed by GAMBIT and its successor, the MIT Game Lab, with policy analysis in technical systems as described by the Technology and Policy thesis manual [1][2]. The inspiration for a research game for modeling the contracting process draws from earlier work by the RAND Corporation who helped pioneer the field of wargaming [3]. This research takes these historical developments and infuses it with the modem pedagogies of the MIT Education Arcade as well as the technical analyses of the MIT Engineering Systems Division to create a new tool for analysis [1][2]. 1.1.1 Research Questions The primary questions asked by the Production in the Innovation Economy shipbuilding study are: - Can the government be doing more to put more pressure on the contractors and their suppliers to get better cost performance and innovation? - Why is the escalation in shipbuilding costs greater than general inflation? This thesis focuses on a subdomain of the shipbuilding process: the contract negotiation between shipyards and the government. Specifically, through the use of a research game, the questions about negotiation are: - What are the differences between a sole-source and a competitive environment? - 11 - - Can we identify the most important tradeoffs that move a negotiation process and influence tradespace exploration? 1.1.2 Research Methods This research uses an original research game to simulate the negotiation process with human actors. This captures their values when dealing with the social aspects of both negotiation and the nested politics that drive these contracts. Data is captured that elucidates the tactics used in negotiation as well as how the proposed contract moves through the tradespace as offers are resolved by the players. This movement exposes players to areas within the Zone of Possible Agreements (ZOPA). 1.2 Thesis Overview This thesis combines two primary fields of knowledge. The first studies games as a research tool, drawing heavily on success in the fields of education, urban planning, war gaming, and management as serious applications. The second field focuses on the current state of the U.S. shipbuilding sector and how policies have impacted the development of this industry into a monopoly or duopoly in many cases. Chapter 2 deals with the history of both fields, specifically on the development of serious games as an answer to social complexities in technical systems and on the legacy of the Jones Act as a market distortion. Policy gaming takes roots from developments in policy making theories as well as successes in commercial games that led to adoption of games in classrooms and offices. It shares these roots with other tools such as system dynamics and operations research that attempt to incorporate qualitative aspects into quantitative systems. Chapter 3 discusses the framework of Triadic Game Design as it pertains to the creation of a suitable research game. By balancing the three main components of reality, meaning, and play, a game can achieve many of the research goals that seem to be at-odds with each other. Through this process, the underlying system model is created. A suitable scenario is then designed alongside game mechanics to bring the game, known as ColumBID, to life. Finally, the - 12 - game is sent through iterative playtesting to polish components such as interface, game engine selection, and number balancing. Chapter 4 analyzes the data collected through the research game trials. The scenarios are first studied individually to highlight particular points in the case that provide unique insight. They are then compared against each other to learn about differences between the two cases. Chapter 5 offers implications for policy making as well as for research game design based off of the results. Proposals for future work based off of the current game structure are suggested which may expand on questions about strategic behavior and model accuracy. Figure 1: Thesis roadmap - 13 - - 14- Chapter 2 - Background and Motivation This section covers the development of serious games by looking back at the evolution of commercial games into uses for military, management, and educational purposes. The chapter then covers the history of the United States shipbuilding industry and ends with the research motivation. 2.1 Commercial Games What is a game? Games are often defined by a rule set with goals that must be reached through some voluntary action. Bernard Suits writes in The Grasshopper:Games, Life, and Utopia that a game is "the voluntary attempt to overcome unnecessary obstacles." While no definition is perfect, this captures the heart of what makes games interesting: players willingly take on a set of constraints to discover the best way to reach an objective [4][5]. This definition covers both physical games and digital games. Games have a history that is both very old and very new. Tabletop and board games such as Go can be dated by thousands of years through the first millennium BC. Herodotus, writing in The Histories in 5th century BC, describes a scheme used by the Lydian empire to survive through a famine by organizing his subjects into teams to play games on certain days as part of their fasting [6]. They would invent common game pieces such as dice and the ball. Ultimately, they resolved their famine problem by playing a grand game of chance to split into two groups. They would send away half of their population to find new, fertile land and settle their own colony [5]. This is one of the earliest written records of games. In that time, games also took the form of physical competition, such as the Olympic Games. Today, games are enjoyed in many forms. Tabletop and board games continue to be played both in ancient forms such as backgammon and checkers and in modem versions such as Monopoly and Dungeons & Dragons. Sports of all kinds are played around the world. Games are no longer limited to these physical forms; many are played at least partially in an electronic form. Publically available digital games began with Spacewar! in 1961. The game was designed by a fictional research group known as the Hingham Institute Group on Space Warfare at MIT, led by designer Stephen Russell [7]. The game involved two players maneuvering - 15 - starships displayed on a Programmed Data Processor-1 (PDP-1). The computer and program were available for student and public use in MIT computer labs. In 1966, the Magnavox Odyssey became the first commercially available video game console. This moved electronic games from the public space to people's own homes. Pong became the first video game sensation around the world when it was released in 1972 in arcades. It appealed to a broad audience because it simulated tennis, a game well understood by the public [8]. Even with limited graphics, audiences and designers such as Mr. Russell were drawn to video games because "one can simulate a reasonably complicated physical system and actually see what is going on." [7] Today, digital games have matured into a $76 billion dollar industry internationally. The widespread adoptions of smartphones and tablets have contributed to games' accessibility to more people. Growing markets include the 10 million people in Mexico, the 15 million players in South America, and the 17 million in South Korea. There are over 100 million people playing games in Europe, another 100 million in India, and 200 million in China [5]. In the United States, 59% of people are regularly playing video games on a tablet, smartphone, console or PC. Regularly is defined as playing an average of thirteen hours per week, according to the Entertainment Software Association [9]. The average game player is 31 years old and has been playing for at least 14 years. The gender split is almost even; 48% of players are women. These people are not playing games by themselves. 77% play with another person for at least an hour every week, with 32% of the overall population playing with their family. Games are becoming increasingly tied into social networks and are useful ways for people to communicate with people they know. This is especially true for families: 51% of households have a video game console. Out of the group of parents with children that play games, they play together 58% of the time on at least a monthly basis. 56% of parents believe video games are a positive force in their child's life [10]. While the mental image of a video game player has been a kid, alone in his room, the reality is that gaming has become ubiquitous in the United States and in many other places around the world. Men and women of all ages are playing with friends and family. Massively multiplayer online role-playing games (MMORPG) such as World of Warcraft and EVE Online bring millions of players into virtual worlds together. These online players create groups called guilds and coordinate in events known as raids. Players are tasked with working together with as many as 72 players at a time. As T.L. Taylor reports about her adventures in EverQuest [11], she - 16 - finds "the main mechanisms at work in all guilds, to varying degrees, are reputation, trust, and responsibility." Players aren't just socializing; they're actively engaging in building a community with connections that bleed over into the real world. Together, humankind is spending three billion hours per week playing digital games [10]. These games span genres including first-person shooter, role-playing, puzzle, racing, adventure, and simulation. Commercial games can be played on a personal computer, specialized game console, a tablet, or a smartphone. While video games evoke images of blockbuster hits such as Call ofDutv, FinalFantasy, World of Warcraft, not all of them are focused exclusively on player fun as the sole outcome. Papers,Please is a game which places players in the role of an immigration inspector in a fictitious Eastern Bloc inspired country. The game is designed to stress the player by simulating the tensions at the border of a dystopian country. Depression Quest is a text adventure which aims to create empathy for people with depression. Players are meant to feel frustrated that they cannot take the common options that would make them happy and resolve problems in life. Brands such as Burger King have produced games such as Sneak King in order to promote their product while political campaigns such as John McCain's in 2008 have designed games such as Tax Invaders to convey their campaign promises to players [12]. Games in the commercial space are being used not only for fun, but also for important messages. Games created for these specific purposes are known as serious games. 2.2 Serious Games In his 1970 book, Serious Games, Clark Abt describes games which were designed for particular educational or academic purposes and "are not intended to be played primarily for amusement [13]." This term has become a catch-all for any game, digital or physical, which is used as a tool to achieve a goal outside of fun. This does not mean that these games are not fun; serious games utilize play to either teach or understand more about a process. Play as defined as George Santayana as "whatever is done spontaneously and for its own sake." He relates work and play to "servitude and freedom" to convey the idea that play is voluntary. Jesse Schell elaborates further and describes play as "manipulation that indulges curiosity [14]." This definition shows how serious games are an effective tool: they invite players to explore systems without hesitation, allowing them to identify how the underlying game model works. These - 17 - mechanics and dynamics teach players about an idea that may be transferred to the real world. When people are forced to learn a lesson or play a game, they lose what Bernard calls the "lusory attitude" and are no longer accepting of the game's rules [4]. They reject the reality of the game's rules and underlying model and will not treat the system as a suitable analog for the real world. This prevents the transfer of lessons learned through play [15]. Serious games must balance engagement to draw players into the simulated world and learning by both the players and the game designers [16]. This section provides an overview of the branches of serious games: war games, urban games, educational games, management games, and policy games. Policy/War Gaming (c. 1810s) Management --- Educational Gaming (c. 1980s) Gaming (c. 1950s) Operations Systems Analysis Research (c. 1945) (c. 1960s) Urban Design (c. 1970s) Game Theory (c. 1945) Figure 2. The evolution of serious games over time. Included are other tools used to quantify social components of technical systems (operations research, systems analysis, and game theory) [3]. 2.2.1 War Games The earliest serious games were used for military purposes. Games such as Chaturanga and Wei Chi were derived from the philosophies of warfare in India and China [17][18]. These games have lasted through nearly three millennia and now are called Chess and Go, respectively [15]. While these are abstractions of warfare were used primarily to teach tactics and strategy to officers, modern war games resemble either the roleplaying games of the - 18 - 1 9 th century or the high-fidelity simulators designed to bring soldiers into virtual training fields. We focus on the roleplaying games as simulators are often extensions of the commercially available versions, designed to place players in a cockpit of a vehicle such as a submarine or fighter jet [19]. The simulators are focused on technical details of execution rather than on sociotechnical systems. As Mood writes in his paper War Gaming as a Technique ofAnalysis, "War gaming is the traditional final step after the preparation of a war plan; it is universally regarded as the best peacetime test of a plan." These games investigate situations that cannot be readily simulated due to time, money, or scope [20]. As an example, Mood discusses the creation of a war strategy: "Destruction of certain targets may have a profound effect on ground warfare in the main theater of operations, for example, while destruction of others are vital for neutralization of enemy air power. It is possible to assign relative priorities to these kinds of targets in a limited context; they must be assigned in consideration of the war as a whole." The roleplaying war games popularized in the 1940s and 1950s conventionally included three teams: red, blue, and the judges. Blue adopts the strategy that wants to be tested while red must identify countermeasures to highlight potential flaws. The judges then debate on the resolution. This is summarized below in Figure 3. Because there is no technical support tool, the outcome of the games are qualitative and serve to highlight potential issues rather than hard estimates on losses of life or quantified damage costs. Figure 3: Wargaming team positions -19- These games allow experts in each part of a complex system to come together and interpret the system as a whole. By sharing knowledge this way, the game allows for new insights into problematic areas where a single expert may decide that there are no issues under a proposed plan. Repeated play also allows for strategy and tactics to be studied together; war games were popular to test efficacy, feasibility, flexibility, and sensitivity of a given plan. In his book, The Signal and the Noise, Nate Silver recalls a proposed war game by the North American Aerospace Defense Command prior to the events of September 11, 2001. The game would simulate a hijacked airliner crashing into the Pentagon [21]. The game was never run due to concerns that the scenario was "too unrealistic." The officers protested, believing that the plane would never come from a domestic airport and that a terrorist would rather hold hostages for negotiation instead of destroying the plane. This is an example of an event that would be outside of typical system boundaries. This would have been a case of a war game that explored a highly unlikely situation and possibly helped prepare a national plan in case of emergency. 2.2.2 Urban Design Games In the 1970s, RAND used their insight with war games to develop games for urban planners. These games were developed to tackle social issues that often came up in planning such as public participation and community development. Because these were tangled with technical systems such as transportation and land use, games became a useful tool to attempt to quantify these societal values [3]. Urban design games in the 1960s focused on using large-scale urban planning models (LSUM) to simulate different policies. The urban planning community did not find great results in this analysis, highlighted by Douglas Lee's Requiemfor Large-Scale Models. He argued that computer modeling had innate limitations and that modelers could not possibly use rational behavior to quantify all social issues within systems [22]. - 20 - Figure 4: Screenshot of SimCity Urban design games responded with Will Wright's SimCity. As one of the most beloved franchises in all of gaming, SimCity brought urban planning to the masses using the principles developed by Jay Forrester to create the field of system dynamics. These types of models and simulation games inspired by SimCity and system dynamics were used to predict issues with energy and ecology. SimCity and its successors continue to bring urban planning to schools and homes around the world, bringing with them a complex, technical system combined with the ideals of players about what types of places they would like to build and live in [3]. 2.2.3 Educational Games Educational games are arguably the most well-known type of serious games. In the 1980s and 1990s, educational games were produced as personal computers began to infiltrate classrooms around the country. Also known as "edutainment", educators aimed to draw in their students by introducing game elements into the learning process. While earlier software focused on automated drills and instructions, these games pulled from arcade culture to "sugar coat" rote learning tasks. Game play is presented as an external reward to hide the learning; however, the main gameplay comprises the same drills and instructions that the classroom traditionally uses. Successful games in this genre include Number Munchers, Oregon Trail, Reader Rabbit, and Where in the World is Carmen San Diego [23][24]. As these games drew criticism for simply repackaging old education, educational scholars such as Kurt Squire have begun to champion games such as Civilization for including educational content as part of the core gameplay systems [25]. -21- , Li ,6.) ortuiN Figure 5: Screenshot of Sid Meier's Civilization III In Civilization, players are exposed to ideas about what factors go into a successful civilization. For example, cities on rivers enjoy benefits to their trade capabilities in-game, which reflects how real life cities grew around important tributaries such as the Nile, the Seine, and the Thames. These principles have ushered in a new set of educational games that draw on the strengths of gameplay, based off of recent literature that determines why games are effective in teaching players new skill sets. James Paul Gee's What Video Games Have To Teach Us About Learning and Literacy introduces learning principles gleaned from games and how they can be used to improve classroom plans. These focus on semiotic domains, which is a set of signs such as symbols and images which describe a complex system. As an example, the classic video game Super Mario Bros. includes items such as coins and flowers. These do not represent coins and flowers as they are in real life; players learn to recognize coins as score-increasing collectibles and flowers as a - 22 - tool to grant Mario the ability to shoot fireballs. This learning is facilitated by various principles, some of which are excerpted below from Gee [26]: - "Psychosocial Moratorium" Principle Learners can take risks in a space where real-world consequences are lowered. - Identity Principle Learning involves taking on and playing with identities in such a way that the learner has real choices (in developing the virtual identity) and ample opportunity to meditate on the relationship between new identities and old one. There is a tripartite play of identities as learners relate, and reflect on, their multiple real-world identities, a virtual identity, and a projected identity. - "Regime of Competence" Principle The learner gets ample opportunity to operate within, but at the outer edge of, his or her resources, so that at those points things are felt as challenging but not "undoable." - Probing Principle Learning is a cycle of probing the world (doing something); reflecting in and on this action and, on this basis, forming a hypothesis; reprobing the world to test this hypothesis; and then accepting or rethinking the hypothesis. - Discovery Principle Overt telling is kept to a well-thought-out minimum, allowing ample opportunity for the learner to experiment and make discoveries. These principles are useful when considering not only how to design educational games, but other genres of serious games where the goal is to teach players about the system in order to transfer ideas or to explore the underlying model's behavior to novel system inputs. - 23 - 2.2.4 Management Games The Beer DistributionGame was developed at MIT's Sloan School of Management in the 1960s to help teach managers about their flaws in how they perceive systems such as the supply chain [27]. This game highlights the problem of the bullwhip effect, nested in a more general lesson about system thinking. The bullwhip effect refers to small fluctuations in upstream demand that are amplified downstream. This concept is not easily understood because it challenges superficial ideas about how supply chains work. Games excel in revealing system concepts and relationships that are not obvious at first glance. Companies have used management games such as the Beer Game to combine the best parts of war games and educational games; corporate training incorporates the lessons and strategy and tactics when considering business decisions over time while also taking principles from educational games to teach new skills to employees. Serious games are especially useful in employee development as they offer some quantitative assessment. Businesses are concerned that the time their employees spend in corporate training should be fruitful. They aim to develop their employees' people, communication, and strategic skills. These sets of skills are not always quantifiable, but the game does provide feedback mechanisms for players to track their own growth in abilities [28][29]. Below is a table of modern business games and what skills they aim to teach: - 24 - AMdiadnmatSkRa GameNaw COSIGA X x x GLOTRAIN LOGTRAIN ONE PRAE SHARE X x x x SPKO X X X X x x x EIS Snilb X X GloVEd Simbu Bewrgame x KUS, x MINT anin TAC-SCM 07 X x TAC-SCM 07 (Caoins) x MARGAhndiUy TOP Simg X Top singlobal Top uuprc Wet Top scinsistir FROST Mupg Saice Debta desig Sme E E E x x E E x x x x x x x E E E x x E x x E x x X x x x x x x x x x x x x E x x x x x x X x x x E X X D X X D X D X X D X E E D E x X X X X X x -- puisti E E E x x x x E x x x X X x M x x Pcess mgt x X x GAMdE p -waX x x x SUPPLYNET Citycar REFQUEST Binumz E E W.e Figure 6: List of serious management games and what skills they aim to teach [28]. - 25 - 2.2.5 Policy Games Policy gaming focuses on the "chaotic and messy" theory of policy making. This theory draws from models such as those from Graham Allison's 1971 book Essence of Decision: Explaining the Cuban Missile Crisis. Allison details the bureaucratic model of politics where the values of individuals lead to a negotiated decision where consensus is drawn from a group of leaders [30]. Other important models include the garbage can model and the policy stream model. These models focus on separate tracks such as the problem, policy-making, and politics coalescing at a given time to form a window of opportunity. Because policy making occurs in a dynamic arena, games help reflect this complex system where several values have to be negotiated along with interpretation of technical facts. While policy gaming grew alongside the roleplay negotiations in war games, electronic games have become more useful as policy making tackles technological systems with layers of social complexity [3]. Mayer puts forth three primary lines of reasoning for why electronic games are becoming favored for policy analysis. First, he argues that there is a cultural coming of age of the "digital natives" that grew up with computer and video games. This generation of students has interacted with games such as SimCity and will be familiar with these complex system models. Modification has become a common activity in these games. These students have created their own technical models to test theories and accept the idea that games can be used as a digital analog of real world systems [3]. Second, this level of technology has become readily available. Common tools such as smartphones are powerful enough to create virtual models. Game companies are developing partnerships with research institutes and private organizations to help them explore systems and teach the public about important issues. Finally, video games have reached a level of public acceptance as an expressive medium. People now recognize that games can be loaded with message. The rhetoric carried depends on the user experience; because it is experiential, players are more likely to believe the message than if someone had simply told them the lesson. - 26 - 2.3 Naval Acquisition American shipbuilding is shaped by the Merchant Marine Act of 1920, commonly known as the Jones Act. This requires that all goods transported by water between U.S. ports must be carried by ships constructed in the United States and manned by U.S. crews. The act has helped American shipyards sustain growth throughout the years. Growth was also led by a sudden proliferation of U.S. shipyard activity during World War II as part of the liberty ship campaign. These liberty ships were cargo ships that were produced in high quantities at fast rates. After the war ended, there was a sudden excess in capacity and inventory. The shipbuilding market has slowly dwindled since as domestic shipbuilding has slowed outside of government contracts [31][32]. Several shipbuilding studies have highlighted the performance of American shipyards lagging behind those in other countries in terms of productivity. Because of the Jones Act, remaining shipyards enjoy a protective policy that keeps a set amount of work nationally. This limits their motivation to improve their infrastructure and adopt certain best practices overseas. Specifically, shipyard contracting with the government has changed in the 1970s and 1980s. Prior to this age, shipyards brought their own designs to government bidding and put an emphasis on finishing a design before submitting their proposals. This stabilized the shipbuilding process and kept prices low. As the technological pace has accelerated, government contracting has adopted a policy of partially finished designs when signing contracts [33]. Because the lifetime of a ship program spans well over a decade, the ship design is unstable and can change from ship to ship. This leads to high cost overruns when dealing with unproven technology and change propagation in complex, technical systems [34]. At present, the rate of inflation in shipbuilding is outpacing the national rate of inflation, as shown below. - 27 - Continued Box 2. intlat 1 1 gl hipb din AFuma s of atm Mocn ete infion 6 4 0 19U ]LM INS 199 1M 1997 2MS 2M 236 9B 2M 201S Figure 7: The annual rates of shipbuilding inflation is outpacing the general rate of economic inflation [31]. The current shipbuilding environment relies on two companies that own all five of the first-tier shipyards, General Dynamics and Huntington Ingalls Industries. General Dynamics owns the National Steel and Shipbuilding Company (NASSCO), Electric Boat, and Bath Iron Works. They receive 70% of their revenue from government contracts. Huntington Ingalls Industries comprises Newport News Shipbuilding and Ingalls Shipbuilding in Pascagoula. They are responsible for nuclear aircraft carriers, submarines, and surface combatants; their revenue comes virtually only from government contracts because they were spun out of Northrop Grumman to handle government shipbuilding contracts. Because foreign shipyards have competitive advantages, there are high barriers to entry for new competitors in this market. The country cannot afford to have the industries suffer in case ships need to be developed and produced to meet a strategic effort. These two factors have led to a relatively secure position for the current first-tier shipyards. The question is what else can be done to encourage improved defense contracting? -28- 233 2.4 Research Motivation The research was motivated by two related gaps in the literature. The shipbuilding industry is interested in revealing how cost pressure may be passed on to the shipbuilders and suppliers. We pursue the possibility of reducing overall cost pressure by optimizing the negotiation process or by creating a tradespace with the potential for more fruitful contracts for both sides. The policy game literature is still generating ideas on how to use games as an accepted methodology for policy research and analysis [16] [35]. Games are being increasingly recognized for their ability to open up the inner workings of technical models, but decision makers are still unsure how well they can trust the results from repeated play sessions [3]. We interpret the data from our game sessions to highlight the use of games as a descriptive, exploratory tool, rather than a prescriptive tool that provides specific, technical details. The research goals are to identify trends in the negotiation process that could provide insight on either the specific issues in the contracting process or on how the contract moves through the tradespace. We explore two scenarios: " A sole-source case (one buyer, one seller) * A competitive case (one buyer, two sellers) This allows us to visualize how the process changes between environments. We consider the competitive case as an analog to the hypothetical scenario where a second-tier shipyard receives investments from the government. By becoming a first-tier supplier, they may be able to provide lower costs over the long run to offset the costs of investment. Additionally, by creating more shipyards, the government expands their base of knowledgeable, experienced builders. The expanded shipbuilding base will be capable of responding more effectively to any required ramp up in production. In the current sole-source environment, some of the major shipyards are operating under maximum capacity in order to guarantee work over a sustained period of time and keep their workforce skilled. The research aims to identify the effects of removing this practice by producing a competitive base. -29 - -30- Chapter 3 - Model Design In this section, we identify the three primary components of the game: the underlying model of contract negotiation, the game mechanics, and the game scenarios. The model was created by identifying key drivers for the stakeholders and mapping their relationships and tensions. We conducted interviews with members of both sides of the negotiation table. To understand the shipyard's viewpoint, we consulted contracting officers and directors at shipyards around the country. These members represented the Pascagoula shipyard owned by Huntington- Ingalls, the NASSCO shipyard in San Diego owned by General Dynamics, and Vigor Shipyards. This set of interviews gave us the perspectives of major shipyards in sole-source and competitive cases as well as the perspective from a lower tier shipyard who has participated in naval contracting in the past. The Navy's perspective on the negotiation process was elucidated through conversations with program managers in the Navy Yard in Washington, D.C., as well as from the members of the naval acquisitions office in the Pentagon. These groups offered a host of experiences from both civilian and military backgrounds and covered a range of programs from the VIRGINIA class submarines to the Littoral Combat Ships. We asked both sides the following questions: - What are your primary drivers and goals in negotiation? - What issues do you believe the other side is not addressing? - What information do you believe the other side is hiding? From this, we identified the key stakeholder positions as seen below as part of our underlying model of negotiation. -31 - Stakeholder Congress Navy Motivation/Concerns * National Security - Optimal resource allocation - Constituency * National Security o Technological Innovation o Fleet Size o Industrial Capacity * Full Funding for Projects * Efficient use of available funds including: o Level of Quality o Vessels delivered on Schedule - Maintaining differentiated value from other services Shipbuilders - Stable workload Differentiated capabilities from competitors - Maximize value to shareholders by maximizing sharevalue o Profit = Revenue - Cost a - To tProfit, either tRevenue or 4Cost Reputation o Leads to increased Revenue by winning bids Figure 8: Key stakeholder drivers and positions in the negotiation process. We then laid out a basic set of targets for the data collection to occur as smoothly as possible. The target audience would be both experts at shipyards and in the Navy. This meant that the game would have to cater to a wide range of expertise about the shipbuilding process. The game would have to be playable within a time frame of ninety minutes in order to fit into the schedules of experts and students alike. This meant that the scope of the model would have to be scaled back for players without experience to comprehend the game scenario in a short time. The game should be easily distributable in order to minimize time commitments. - 32 - To overlay game mechanics on this model, we used the triadic game design framework created by Casper Harteveld [19]. This balances the reality, meaning, and playability of the game to create an experience which is engaging, but produces meaningful results because the game mimics the actual system effectively enough. a PLAY DESIGN SPACE POOM ;0000 RFALTY MEANING (van"" mscwL#msf~N L / - Figure 9: Triadic game design framework These allowed us to establish an appropriate scope for the model. The game mechanics and dynamics were then built to simulate the negotiation process. Case scenarios were then overlaid on top of this game system to focus on the research questions. The creation of the research game ColumBID is detailed below, as seen through the different trade-offs considered between the goals of the triadic game design framework. -33- 3.1 Reality Every game is based off of a model of reality which allows players to act intuitively with the game system. The players' ability to understand the game's mechanics and dynamics is affected by how well they can accept the relationships between components of the game's system. The theory of constructivist learning explains that this understanding occurs because of mental representations being as meaningful as their physical representations. Jean Piaget is widely regarded as an important figure in constructivism and believes that the learning occurs through interaction when actions on mental objects produce results in a way that can be understood by the learner. His theory of learning is based off of the key principles that knowledge is built by the learner, not passively from others, and that this learning is experiential [36]. Ernst von Glasersfeld takes these ideas and moves it to radical constructivism. He argues that this internal system understanding is fundamentally different from the repetition of behaviors, which he calls "training". Because students learn through experiential methods, it is more interesting to view their errors [37]. Games provide an interesting avenue for experiential learning as they often give players the ability to fail and challenge mental constructs. According to Hewson and Thorley [38], these challenges to knowledge must satisfy three conditions. The new ideas must be intelligible, plausible, and fruitful. The learner must be able to comprehend what this new idea means in order to repeat it in the future. The verisimilitude of the idea allows the learner to believe that the interaction can be applied to reality. This idea must provide a novel interaction for the learner to develop the new piece of knowledge. The game's depiction of reality has effects on all three components of constructivist learning theory. For players to understand the system, the player must be convinced that the virtual world is sufficiently comparable to the real world to understand what their actions are in the game. The scope of the game world should allow players to assume that the actual system could behave in this manner. Finally, the insights developed should have some ability to be tested in the real world. The "reality" of the game is a model, much like one used in any other scientific test. The model can be analyzed using three criteria: flexibility, fidelity, and validity. Flexibility determines how well the model holds up to changes in the system parameters. Fidelity analyzes the visualization of the system in-game. Validity discusses the underlying system principles and - 34 - how well the virtual model interactions simulate those of the actual system. 3.1.1 Flexibility The flexibility of the system refers to how well the system can adapt to new parameters. The system should be able to behave in a believable manner in the current scenario. However, the model may be versatile enough to react to changes in the game's assumptions and still behave in a realistic fashion. The functional decomposition of games includes the usage of games as a laboratory to explore unknown situations [39]. This is one of the advantages of using games as a research tool; they may be used to gain insight into scenarios that are unreasonable to explore through normal testing. The hypothetical case may be too large in scale of either time or money. From parallel research in the study, we found that contracts could be assigned as either fixed-price or cost-plus type in both sole-source and competitive cases. The game should then be designed to handle both of these scenarios as well as adopting other levels of model detail. We decided to focus on fixed-price contracts as they would be easier to explain in a short period of time compared to the cost-plus contracts [40]. The key stakeholder drivers may not be present in the game in all cases, but there is enough flexibility to incorporate these features as desired. The particular drivers included in the game are discussed below in the Validity section. 3.1.2 Fidelity Fidelity in a game system typically refers to the graphical fidelity. A game usually should have enough fidelity to prevent players from being distracted by how different the simulation is from reality. However, there was a key constraint in the game development which focused on the ability to conduct long-distance gameplay sessions with experts. Because the target audience included contracting officers at both shipyards and in NAVSEA, the game would have to be built as simply as possible. Due to the nature of government computers and the time limit imposed on the game, the graphical fidelity was scaled back. Rather than utilizing a game engine to produce graphics for fidelity, ColumBID relies on a written scenario to convince the player that the situation is realistic enough. - 35 - The scenarios are based on the LCS program [31]. The final costs in the game were tuned from several play test sessions throughout the summer and fall. The build rate and total years available for negotiation were designed to mimic the length of a generic ship program; a class of ships is typically built for more than a decade. Ten years in ten ships allows for players to experience some of the learning effects in shipbuilding and uncertainty over long stretches of time. These ships are built over two blocks, which are commonly used in defense contracting to split a program up into different contracts to allow for re-negotiation as the program is evaluated every few years. 3.1.3 Validity Validation is the most important component of the reality framework when dealing specifically with research games. This ensures that the data provides some meaning to both the research team as well as to the players. Without a valid model, the research team would be unable to transfer lessons learned from the gameplay sessions to the real world model [19]. From the players' standpoint, they must believe the model behaves with reasonable precision and accuracy in order to immerse themselves in the game world. This allows them to act without concern for breakdowns in the model and accept that discrepancies in their mental models of how the system should work are flawed, rather than blaming the model for being incorrect. This validation requires a certain amount of detail; the particular scope desired changes depending on the composition for the testing group. We aimed to reach a level where players with contracting experience would recognize the system and be able to provide insights from their past experiences, without being distracted by key details left out in the scenario. To validate the model, stakeholders were consulted during model creation, scenario design, and data collection. Assistance outside of the MIT study came from the shipyards, NAVSEA and SCRA. They prioritized the model's ability to capture the cooperative aspects of negotiation as well as the issues with uncertainty in future material costs. Program managers in NAVSEA provided historical ship and program schedules as baselines for the scenario. Pilot testing with players who were unfamiliar with the situation showed that they were not distracted by gaps left in the model. The model does not currently incorporate technology changes as years pass because of the complexity in the system. Learning effects are simplified to an initial lead - 36 - ship costing more time and money. The budget is assumed to decrease exponentially according to an internal rate of return. 3.2 Meaning When constructing the game's mechanics and dynamics, the overarching research questions must be kept in mind. The game's actions should allow for a set of data from which meaningful results may be interpreted. In ColumBID, the game's systems are designed to allow the negotiation process to be studied. By creating two primary scenarios, sole-source and competitive environments could be compared. The scenarios were built from historical data of the LCS program. This section highlights how the goals of the study affected the game design and how we incorporated the additional constraints in the research process as part of the game design. 3.2.1 Purpose ColumBID was selected as our research tool of choice because it could incorporate the human elements into a technical analysis. Bots and van Daalen offer a functional decomposition which reveals how games can support this analysis [39]: - 37 - Game as a laboratory: Research and analyze Game as a design studio: Design and recommend Game as a parliament: Game as a practice ring: Clarify values and arguments Provide strategic advice Game as a consultative forum: Democratize Game as a negotiation table: Mediate Figure 10: Schematic representation of functions of games for supporting policy development [39]. ColumBID focuses on three of these functions. As a laboratory, the game is designed to research theoretical scenarios. The boundaries of the game are not restricted and will still respond to input values that are outside of the initial scenario. This makes the game useful in exploring hypothetical cases such as a competitive market in current sole-source environments. The game is also useful in analyzing patterns in the contract negotiation. Functioning as a design studio, the game collects time-stamped data on the proposed contract prices and build orders. This data can trace the negotiation process as it evolves and can be used to see how the players move through the trade space. Finally, the game is useful as a parliament. Because players are not initially aware of each other's goals, the process can be used to clarify how each player interprets the system. People placed in a similar role may not value all goals equally. With a game, their relative values can be captured in some sense as key tradeoffs are identified. 3.2.2 Strategy For ColumBID to be useful as a research tool, we looked towards established game designs with similar goals. Through the efforts of groups such as the GAMBIT and its successor, - 38 - the MIT Game Lab, we were able to draw inspiration from local serious game efforts. We looked at two efforts in particular: The Mercury Game from the MIT Science Impact Collaborative and Movers and Shakers from the MIT Game Lab. The Mercury Game was designed "to teach people about the role of science in international environmental policy making." It was made to be playable in 3-4 hours for students and decision makers in groups of 9-11 players. To create the scenario, the design team for the Mercury Game created a set of roles which approximated real world stance on scientific problems. Four primary issues form the heart of the negotiation scenario, with each role being given a set of finite positions to take on each issue. The game's dynamics follow a moderator as they move from opening statements to negotiation to final agreement [41]. The form of ColumBID was built in a similar manner. With the stakeholder matrix, the roles naturally took shape as the national government and commercial shipyards. Congress was moved to a set of parameters that would shape the negotiation process, specifically the national budget and goals for the government player. The researcher functioning as moderator and game master would be responsible for interpreting the role of Congress to the players. A similar set of issues were designed as two variables: the build order of the ships and a contract price. Rather than giving players a finite set of options, the variables were left as open choices with any range acceptable if both players could agree upon it. This makes no statement about if the budget can be violated or if the shipyard is able to operate at a loss; this freedom was important to see if the value system imparted by the role briefings could be flexible. These role briefings were crafted to represent the key drivers for each player. Government players were ordered to value flexibility while keeping the ship prices as low as possible. Historical profit values from the two major shipyard companies, General Dynamics [42] and Huntington-Ingalls [43], were used to generate idealized profit margins in the shipyard briefings. In the sole-source case, both sides were told to value preserving the capabilities of the work force. Finally, the briefings gave information about various expected costs to both parties. To assist in the negotiation process, two types of spreadsheet tools were designed. One is a private tool which contains the cost information in the briefings. This sheet is designed to ease the level of arithmetic needed during the game. The other sheet is a shared spreadsheet between each government-shipyard pair. This allows players to share proposals without giving away what their private tools hold. -39- Movers and Shakers was designed by the MIT Game Lab [44]. The design group was headed by Dr. Konstantin Mitgutsch, who calls Movers and Shakers an example of a subversive game; this is a type of serious game that focuses on challenging players' expectations. Movers and Shakers focuses on leadership dynamics by placing two players in charge of workers in a fantastic office setting. In the game's fiction, the planet rotates because of workers operating a machine deep underground. Two players are assigned the role of office managers and must position their workforce to properly motivate their workers. One player sees how well their workers communicate and must organize them so that they are seated with favorable relationships to neighboring workers. The other player views the workers' productivity and positions them to obtain an optimal work rate. However, both players are viewing the same workers and must position them simultaneously. The game transitions from a competitive game to a cooperative game as players realize they must work together to reach their common goal [45]. Similarly, ColumBID highlights the fact that negotiation is ultimately cooperative between both sides to reach their goals, particularly in the sole-source case. Just as Movers and Shakers uses asymmetric information to teach players that a mutual goal is seen through two different lenses, ColumBID offers different interpretations of the scenario depending on their role. The government sees a singular, best-guess for ship costs, while the shipyard is given a different baseline estimates including best-guess, best-case, and worst-case. This draws players to notice discrepancies in their proposed costs; they are unable to reconcile the gaps if they do not understand the overhead costs and risk judgments present on one side. The risk also leads to a value judgment by the shipyard player. Because of this, repeated play sessions with different players leads to new asymmetries of information. The presentation of the game uses a game engine called Twine. While normally used to create interactive fiction such as text-based adventures games, Twine possesses the ability to host the game on a single web space for easy distribution. The Twine interface links pages of text and links to each other in a format similar to a choose-your-own-adventure [46]. The Twine interface for ColumBID is displayed below: - 40 - #0W3p1 -Tv Figure 10: Twine interface for the game designer. In conjunction with Twine, the spreadsheet tools were designed on Google Drive. Because of the auto-save features in Google Drive, the negotiation's evolution would automatically be recorded as the players proposed to each other on the sheets. This occurs for every event when a cell is not edited for a period of around ten seconds. This allows the tool to capture time stamped data about the current proposal's prices and build orders. The shared functionality works because Google Drive updates in real time; spreadsheet sharing would otherwise be impractical without the use of a federated system to create an online, multiplayer environment. This also simplifies the game requirements down to only an internet connection; they would not need to open these tools in a separate program. Pre-questionnaires and post-questionnaires finish the game's basic design. These questions reveal the players' school and work experiences in similar situations. They are used to help identify any effects of prior knowledge on the players' experiences with the game. The -41- testing sessions concludes with a debriefing with the players about the goals of the research and their experience with the tool. The debriefing is important to find out about player strategies and which components of the model they understood. As an experiential method, game research requires post-game discussion with the players to identify drivers for their behavior throughout the play session [16]. While playing, people may not have time to properly reflect about why they chose to do a certain action. As explained by Schell [14], "How can we observe our own experiences without tainting them, since the act of observation itself is an experience?" This problem is referred to as the Heisenberg principle, in reference to the quantum theory principle that poses a related issue about observations and measurement. Current methodologies use debriefing sessions to allow players to dive into their memories. Combined with silent observation by the researcher, this analysis provides the best currently known way to reveal a player's motivations at a given point of time in the game. 3.3 Play This section details how each game system ties to the research purpose through a type of "play". This draws heavily from the frameworks of Richard Bartle and Roger Callois on different types of players and the experiences that they seek. Richard Bartle created the first multi-user dungeon (MUD), an interactive, multiplayer role-playing game. Bartle identified four types of players who enjoyed these text-based games: killers, achievers, explorers, and socializers. Killers enjoy using the game's mechanics to disrupt the experiences of other players. Achievers are players who pursue maximum attainment of their goals in the game system. Explorers are interested in analyzing the game's systems to figure out how the mechanics and dynamics work. Socializers look to communicate with other players within the game's particular context, taking on a roleplay aspect [47]. As a game rooted in textbased briefings with simple mathematical aids, ColumBID appeals to these different player types in ways similar to a MUD. Through iterative playtesting, a variety of players provided insight into how the design team could make the game engaging to a general audience. In Man, Play and Games, Roger Callois classifies play into four fundamental categories, known as ag6n, alea, mimicry and ilinx [48]. His terms correspond to competition, chance, simulation, and physical play, respectively. ColumBID focuses primarily on competition and - 42 - simulation with elements of chance. Salen and Zimmerman further discuss these elements as different schemas of play [15]. The aspects of competition and simulation are further discussed in the schema for analyzing a game as a system of conflict and as the play of simulation. ColumBID also engages players as a system of information and as a game theory system. This section identifies how the gameplay may be analyzed through these different frameworks. 3.3.1 Systems of Information Games allow for imperfect information to be explored. Similar to how imperfect information is explored in Movers and Shakers, each player is given a different set of statistics about the current scenario [45]. They are also not told specific information about what each other player holds. The naval side is given a best estimate on the costs per ship, while the shipyards are given a best-case and worst-case scenario in addition to the most likely scenario presented by the Navy. Both sides are given approximate annual budgets allocated by the Navy. Players are given freedom to reveal as much of their private information as they feel is useful. This creates an economy of information within the game, where players are assign values to key pieces of knowledge. The negotiation process slowly reveals information to all players, but this can be obscured if not every player is truthful. Information in the game is also manipulated by false knowledge created by one side. This gameplay system is known as objective information against perceived information. Objective information refers to the true structure of information asymmetries in the game, while perceived information is what the players observe as they play. Players then have a choice between trading value for their game objectives or more information towards their goals. In the negotiation, this means that they can make a trade-off to improve their position on the contract or reveal part of their private information. Celia Pearce breaks down information by who knows it. Her four cases are information known to all players, information known to only one player, information known to the game only, and randomly generated information [15]. In ColumBID, there is no randomly generated information. The hypothetical risk resolves to the same answer so that the scenario is consistent. With the block system, the players are able to move information from private to public if they choose to agree on a partial order fulfillment. After one block, the players learn about the actual - 43 - shipbuilding costs as well as the real profit margins made by the shipyard. This reduces uncertainty by revealing the specific scenario. In gameplay, this presents an interesting tension because a player may not want to resolve the first block if they believe they have made a great deal. Imperfect information provides gameplay tensions which reflect the reality of negotiation sessions; information has value, both in learning new information and in denying information to the other players. In playtesting, these information asymmetries are especially important to Bartle's killers and socializers. They are more likely to use information as a leveraging tool to reveal how the game system works. Because the information is shared primarily through social interaction, these roles are likely to enjoy conversing with other players as part of their game strategy. While killers are likely to engage in manipulation of information through feints and bluffs, socializers may value information more as part of the negotiation process instead of becoming engrossed in the fight over numbers [49]. 3.3.2 Game Theory Systems Game theory revolves around rational players who decide strategies simultaneously to maximize their utility functions. In the monopolistic case, ColumBID resembles the theoretical Chicken or Hawk-Dove game. This is envisioned a game where two players are facing a catastrophic outcome if they stay on their current course. However, this course is also the best way to reach their goals. One or both of them must decide to divert to a lower strategy to avoid the worst-case scenario. In the monopolistic case, the shipyard and government may both take strategies maximize their utility functions by suggesting contracts that heavily favor them. The difference between their offers may be too high to negotiate and they may be unable to come up with a contract, causing the government to not have any ships and for the shipyard to not have any work. This is only resolved if one side acquiesces and makes major concessions to the other [50]. In formal game terms, three of the four outcomes result in a zero-sum: Aggressive Strategy Concession Strategy Aggressive Strategy -x,-x y,-y Concession Strategy -y,y 0,0 Table 1: Strategies for the chicken or hawk-dove game - 44 - In ColumBID, there are important differences from the game theoretic model. The players are not assumed to be rational. While game theory allows for players to bluff, it does not assume that players can be "vindictive, forgetful, self-destructive, or lazy" and deviate from a utilitymaximizing function. Players are not necessarily making simultaneous decisions; one player may choose for an initial offer to come from the other side. This reveals player strategy to the other side, allowing them to make an informed counter-offer. Utility-maximization differs among players; each person may rank the various goals differently and may bring outside knowledge to create an entirely different set of goals. The game theory model does allow for two important parts of ColumBID's design. As an economic model, it allows for researchers to imagine negotiation as a decision tree and analyze the final contract as an outcome of successive, iterative deals. As a game design model, the designers may avoid including a degenerative strategy in the game system. A degenerative strategy is always the best choice and results in an unsatisfying game; once this strategy is discovered, there is no uncertainty left in the gameplay. In game theory, the best strategy is known as the Nash equilibrium. Formally, there are multiple Nash equilibriums in the Chicken game, not to be confused with a mixed strategy. This means that each game will have a single Nash equilibrium as a non-coordination game; one player should make a concession and the other should remain in a strong position. There is no formal way to resolve which player should take which position. This avoids a degenerative strategy and creates interesting gameplay [15]. A research objective is to map the negotiation space and study how the negotiation moves over time. Game theory says that players should pursue Pareto dominant deals to current proposals. It is commonly held that players will only accept moves that improve both of their positions until they reach the Pareto frontier. At this point, they will then slide along the frontier until they reach an agreeable outcome. By creating the game model with this in mind, the study will be able to examine how well game theory holds up with respect to Pareto dominant moves to the frontier. Bartle's achievers are the most important playtesters with respect to this gameplay schema. Since these players naturally aim to maximize their outcomes, they will agree with game theory's predictions if they accurately perceive the situation. - 45 - 3.3.3 Systems of Conflict In any multi-player game, conflict is at the heart of gameplay. ColumBID is both a cooperative and competitive game. While each player cannot achieve their goals without the help of the others, they also cannot reach all of their goals without others' concessions. Just as in Movers and Shakers, the research game appears to be primarily competitive from the outset. Through iterative playtesting, the design team included several subtle components to help guide the players to this idea. Players are assigned teams and are seated facing each other. Their briefings create an external pressure in the form of corporate stockholders or Congressional members to increase the illusion of having a side to take. The goals of the game are easiest to reach when players decide to cooperate and reveal information truthfully. The game shifts to a cooperative phase when the players realize that it is possible for everyone to succeed. Then, the players work together to maximize their goals in a single system instead of separate systems that share common, scarce resources. Callois considers competitive play to be fundamental to game engagement. By providing an equal field, games allow players to engage with one another under similar rules. This creates the illusion that the winner won because of their skill instead of any external factors outside the "magic circle" of the game [15] [48]. This opportunity at a fair contest is what draws players into competitive play. Although ColumBID does not provide a level playing field for all roles in the game, it does provide a structure where participants believe they can achieve their goals. By providing a set of criteria to evaluate players' performance, the game provides necessary feedback to the players on how well they are doing in the game. These reference points are vital to guiding the players towards a satisfactory negotiation. The alternative would be to have players unsure of what they are doing initially, with no feedback to place them on the right track. The competitive aspect of ColumBID engages players and keeps them moving forward in the negotiation process. - 46 - 3.3.4 Play of Simulation Salen and Zimmermann define play as "free movement within a more rigid structure" to frame games through the experience of engaging with them. In a computer model, this section focuses on the interactions of players with a model that simulates a system they are knowledgeable about [15]. Transformative play refers to the structure being changed due to playful interactions. In the model, the boundaries are governed by a set of rules described in the briefing. These include the number of ships, the usage of blocks, the number of years, and the allowable budget. In the game, players are allowed to violate any of these rules whether through the introduction of outside information, the exclusion of these rules with justification, or as part of the negotiation process itself. Roger Callois classifies this simulation play as "mimicry" where players take on a different role and behave appropriately. Players are drawn in by the opportunity to pretend to be someone else. These players would fall under Bartle's socializers and explorers. They are interested in the roles given to them by the game and want to explore how the system behaves from their perspective [48][49]. Combining mimicry and transformative play allows for the game to explore novel scenarios and consequences of changes in the system parameters. Players change the rules of the game if they either feel it will provide an advantage as they play or if their sense of reality motivates them to justify a rule change. This transformative play allows for the exploration of "unknown unknowns", as described by Donald Rumsfeld. The system may be changed to a situation that has no real-world analog [21]. Through this simulation, players are drawn in by the chance to immerse themselves in a new role and partake in novel situations. 3.4 Final Design ColumBID focuses on a single negotiation, which splits a contract into one or two blocks. After a pre-questionnaire, players are given a briefing which details one of two scenarios. The game features either a two-player game that simulates a monopoly or a three-player game that simulates a duopoly. A screenshot from this briefing is shown below: - 47 - Figure 12: A screenshot of the briefing page of ColumBID. Players are given a set of spreadsheet tools to assist them in the negotiation process. These tools take one of two forms: they are either a private tool designed to provide useful information and ease the level of math required, or a shared tool to propose offers to the opposing side. These are displayed below: -48 - Block I Internal Rate of Return: Proposed build order: Year from start of block 1l 1 (All prices are in millions) Estimated budget for block 1: $450 (A blank ship count means no production; A zero means ships are being built but none are delivered.) Estimated Cos t Estimated Cost Estimated Cost (Worst-case (Naval-guess (Best-case # scenario) scenario) Ships scenario) $100 $100 $100 0 $727 $6821 $636 1$744 $5791 $496 $75 $75 $751 $68 $68 $68 $62 $62' $62 $56 $561 $56 7 $51 $511 $51 8C $47 $47 $47 IC S.4 $421 $42 10%! #Total # Years _ Expected Ships Block 1 Cost $1,6$35 3 3 $1,763 $588 $588- $545' $545] $1,973 Total $658 Iear $658, /ship First Block: $1800 million for 3 ships over 3 years Proposed $1,800 contract price: $600 /year $600 /ship $371 $165' 2.12% 10.12%1 Expected Block -$173 Profits Expected Block -8.79% Profit Margin Both Blocks Combined: -$539 -$4101 -23.03% -18.57%' -49 - -$749 Expected Profits Expected Profit -29.39% Margins SHIPYARD PROPOSAL NAVY PROPOSAL Block 1 cost: Block 2 cost: Block 1 cost: Block 2 cost: Block 1 build order: Block 2 build order: Block 1 build order: Block 2 build order: Ships delivered Year # Ships delivered Year # Ships delivered Year # Ships delivered Year # 1 1 1 1 2 2 2 2 3 4 3 4 3 4 3 4 5 6 7 5 6 7 55 6 7 6 7 8 8 8 9 9 9 8 9 10 10 10 10 Figure 13: Spreadsheet tool interface seen by the players The sheets accept two inputs: a build order and a proposed price. The shipyards are granted three different scenarios which represent a certain risk profile, while the government sees a single, best-guess case to work with. This reflects conversations with the experts about how each side manages risk and uncertainty. The shipyard is given overhead costs for each year and an internal rate of return that outpaces the expected rate of inflation. Because of this, the spreadsheet calculates net present values which will differ for both sides even if the same inputs are calculated. The sheets also provide error messages for common input errors such as simultaneous block execution and budget overruns. All players' spreadsheets calculate the government's budget as beginning at $450 million per year and decreasing at the internal rate of return. When players enter their proposed ship counts, the sheet counts the initial ship for$600 million, $650 million, or $700 million, depending on the scenario. Subsequent ships are priced either at $250 million, $300 million, or $350 million, again depending on scenario. In the shipyard player's case, $100 million is added for each year. This value is then transformed according to rate of return to produce a final value which is revealed each year to the player. The sheet then adds up all years to create expected - 50 - costs. The tool automatically counts how many years were involved and calculates annual rates and per ship rates. The proposed price is then compared against these outputs to generate useful values such as expected profit margin and budget overruns, depending on the player's role. If the players choose to agree on block I separately, the game master calculates the actual contract price according an initial cost of $650 million for the lead ship and $325 million for the following ships. These values are fixed in all versions of the game. Players may also decide to use only block 1 or to agree on both blocks 1 and 2 simultaneously without resolving the outcome of block 1. The game ends with a post-questionnaire and debrief so that players have a chance to reflect on their strategy and tactics. -51 - -52- Chapter 4 - Analysis The research game produced 37 different negotiations with 88 participants: Price type notes trial # Year B Ship B Year A Ship A Repeat Steps involved? 3650 3650 4000 3150 3250 3000 3600 3150 4131 3400 3300 2 2 2 2 2 2 2 2 2 2 2 1 2 3 4 5 6 7 8 9 10 11 2 12 give all cash give all cash 4 5 3 5 5 8 10 3 1 6 6 3 4 2 4 5 10 10 2 0 5 5 7 6 8 6 5 0 8 10 5 5 6 5 7 5 5 N N N N N 0 N N 6 N 9 N 4N 4 N N no block 2 13 14 no agreement 15 16 17 18 19 20 7 8 3 2 5 5 4 2 4 4 6 6 5 4 5 5 5 5 6 8 6 6 4 4 5 6 5 5 N N N Y Y N N N 2700 3350 3640 3000 3760 3400 2 2 2 2 2 2 2 2 3280 2940 3 3 1 2 Y Y 3050 3100 3030 3100 3350 3550 2750 2700 3850 3400 3 3 3 3 3 3 3 3 3 3 3 4 5 6 7 8 9 10 11 12 Y N N N N N N N N N 3640 3160 3 3 13 14 2741 3000 3000 3 3 3 15 16 17 3150 10 7 11 15 17 9 11 13 9 6 12 bribery N____ _______N Y Y Y Table 2: Resulting final contracts for the 37 negotiations - 53 - 11 16 13 5 5 8 8 9 Some of these participants were invited to play both variants of the game and were noted as having repeat experience. The sample drew from a convenient pool of MIT students as well as remote experts representing NAVSEA and SCRA. The player pool was 75% male, 25% female with a median age between 25 and 29. The average player had 5-6 years of college experience in a scientific or technical background and 1-2 years of work experience in a technical field. The aggregated sample details are presented in Appendix A. We found that gender, work experience, and school experience did not have any produce any significant differences in the results. 4.1 Monopolistic Case The resulting final agreement prices in the monopoly games are presented below. Distributions type=2 Price 4000 3500 3000 2500 - - - - - - Summary Statistics Mean Std Dev Std Err Mean 3404.5 366.11606 86.294383 Figure 14: Monopolistic case price results - 54- The average shipyard costs in each round were around $2.981 billion. This resulted in a mean profit margin of 14.2% for the shipyards. While this number is slightly higher than the expected outcomes of 8-10%, it does not seem unreasonable when considering the ranges of uncertainty included profit margins ranging from 0% to 30%. The survey included questions on how truthful players were during the game, and on how much they had to compromise to meet their goals. The survey data showed significant results with a 95% confidence rating for both questions using t-tests on the two player roles of shipyard and Navy. Survey ratings went from I (strongly disagree) to 7 (strongly agree) and can be found in the appendix. Shipyard players averaged a 4.7 on compromising and a 5.1 on truthfulness. The means for Navy players were 3.4 and 6.2 on compromise and truth, respectively. The shipyards were able to command higher prices by bluffing in a position of power during the negotiation. Even though the players in the Navy role were not receiving great returns on their costs, they were still reaching their goals of ensuring defense industry stability. The final price agreements are graphed against the number of negotiation offers that were presented in the game session below: Bivariate Fit of Price By Steps 3800 3600 0 * 3400 3200 3000 * * 2800 2600 ---- 4 6 8 12 10 16 14 Steps I- Polynomial Fit Degree=2 Polynomial Fit Degree=2 Price = 3671.5521 - 37.420247*Steps + 1.9191307*(Steps-10.2941)A2 - 55 - 18 Summary of Fit RSquare 0.197842 RSquare Adj 0.074433 Root Mean Square Error Mean of Response 281.809 3321.875 Figure 15: Number of proposed contract drafts ("steps") fit against final contract price There was no statistically significant correlation between the number of steps and the final contract price. While this seems to point that better communication does not necessarily lead to better deals, it should be explained that the tradespace may not have been fully explored within the time constraints of the research sessions. We present a representative case from the two-player game below to show how players explore the tradespace: Cost 1 Ships 1 Years Cost 2 Ships 2 Years Time Proposed by 1400 4 5 6:30 N 1650 5 5 6:40 N 2250 5 6 1200 5 4 6:49 S 2250 5 6 1150 5 4 6:51 S 2000 5 6 1150 5 4 6:57 N 3400 10 10 6:58 N 3300 10 10: 7:00 N 2140 5. 600 6. 1150 5 4 7:10 S 2. 2700 9 8 7:19 N 3350 10: 10 7:23, N 3600. 10: 10. 7:27. N Table 3: Data set of a representative case from the monopolistic game -56- For a given number of ships and years, the Pareto frontier may be constructed where the Navy's annual budget and the breakeven costs for the shipyard create bounds of a feasible tradespace: Profit (Shipyard utility) 0 0 Pareto Frontier lines Price (Navy utility) Figure 16: Tradespace quadrants in the negotiation game The green represents the feasible space where both sides are happy, while the red represents the area where no one reaches their goals. In the blue spaces, one side is happy and a negotiation may be possible. The Pareto Frontier slides and rotates when the ship and year counts change. It is possible for the current terms to be in a suboptimal position, as shown by the Pareto front on the right that does not intersect the green area. This came up during the gameplay sessions, especially in the second block when the national budget decreases significantly. Players who locked into block 1 faced unwinnable decisions when deciding block two terms and had to decide who would take the failure state position. Note that with the rotation and shifting, it is possible for both players to be fully in the lose-lose situation. The representative case is graphed below, for goals of 8% profit and a national budget requirement of $450 million per year. -57- 40.00% 30.00% /1 20.00% 20.00% - 10.00% /e i 0.00% 50 2 100 - - 150 200 / 250 300 I Il 400 -10.00% 6 -20.00% -30.00% -40.00% -50.00% -60.00% Annual Contract Price Figure 17: Representative negotiation graphed along with different Pareto frontiers We find that players shift along a frontier after locking in the number of ships and years desired. They explore a front over a few offers and then jump to another frontier if the deal is not agreeable to both sides. This makes the relationships between the three variables easier to understand since cost can be modified independently of the other factors in general. The human players do not explore the tradespace by finding the best point in a multivariate optimization; they take educated guesses to set a frontier and then negotiate over where the optimal resting point on that line should be. The slope of the line is governed by the available annual budget while the intercept point is determined by the number of ships in the deal. Given sufficient time and motivation to explore the entire tradespace, the Pareto frontier could be imagined as a unique set of equilibrium points depending on the negotiators' personalities, as imagined below by the blue line: - 58 - Profit Annual Budget Figure 18: Consruction of overall Pareto front as a set of unique optimizations of case specific Pareto frontiers Note that this graph considers only one block of the overall negotiation. It is possible to construct a space using the proposed prices of both blocks to find an overall ZOPA where one block may not be in the win-win quadrant as proposed by Figure 14. We take a different case from pilot testing and present this notion below in Figure 15: - 59 - 1 - Initial offer We are able to collect data on the state of the contract (years, # ships, price) through the negotiation process with timestamps. This is data from a session during a January class with two players. is over budget (user error) 2 - Navy offers contract at expected cost 3 - Shipyard counteroffers to increase odds of profit in block A 4 - Navy counteroffers in block A 5 - Shipyard takes tradeoff in exchange for guaranteed profit in Block B (the light blue line) Figure 19: The evolution of the sample through time in a block cost-block cost space This figure presents the evolution through time of the contract in the ZOPA, highlighted by the yellow area. The red areas are considered the lose-lose segments while the orange presents the possible win-lose area; because of the uncertainty in the game, the players are unsure about exactly which area they are in. The area bounded by the cyan line represents a case where the shipyard has almost certaintly assured themselves of a winning outcome. An interesting notion that occurred in the representative sample featured in Figure 13 as well as three others in the monopolistic case is that the Navy player decided to give as much as they could to the shipyard player. They recognized that since the budget did not carry over if unused, they could place the money towards their goal of ensuring the shipyard's well-being. Although it went against the written goal of reducing cost per ship, they felt they understood the system well enough to say that the cost minimization was a useless ship. Some of these players had experience with defense contracting and cited the tactic as one that validated the model. The two most expensive cases in this monpolistic mode involved using this tactic. - 60 - 4.2 Competitive Case We present the final result prices in the competitive case below: Distributions type=3 Price 4000 3800 3600 3400 3200 3000 2800 1 2600 Summary Statistics Mean Std Dev Std Err Mean 3155.3529 321.84953 78.059976 Figure 20: Competitive case price results The average shipyard costs in this round were $3.155 billion. The mean profit margin was approximately 6% for the shipyard that landed the contract. In all of these cases, the from the government did not choose the dual-award option. With a 95% statistical validity student's t-test, the players again differed on how truthful they were. The shipyard players a 4.9. With averaged a 5.7 on their truthfulness, while the Navy players' average response was bluff about the ability to play both shipyards against each other, the Navy player was free to offers and counter offers since they could not be publicly revealed to all players. a worse One particular case involved the Navy selecting a shipyard which was offering -61- deal than their competitor. In this game session, two of the players would step outside and have private conversations, leaving the other player unable to share counter offers. They engaged in bribery and thought of different ways to minimize costs together, such as lying about ship delivery times. While we do not believe the government engages in behavior such as bribery, we have talked with NAVSEA members about tactics where one side refuses to talk until a given time, putting pressure on the negotiation to create a favorable contract so that the situation can be resolved. Here, players walked away from the table to achieve the same effect. 4.3 Differences Between Cases The two price sample sets were compared using t-tests: Oneway Analysis of Price By type 4000 5 S I 0 S 3500 S 0 S 0 S S ... X 3000 0 0 S 0 2500 0 2 3 type Each Pair Student's 0.05 Means Comparisons Comparisons for each pair using Student's t Confidence Quantile t 2.03452 Alpha 0.05 LSD Threshold Matrix Abs(Dif)-LSD 2 3 - 62 - Abs(Dif)-LSD 2 3 2 -234.22 3 11.51 11.51 -241.01 Positive values show pairs of means that are significantly different. Figure 21: Comparison of prices by type The two data sets were found to have a 95% significant difference from each other. The overall costs dropped by 8% by moving from the sole-source environment to the competitive case. We do not interpret this as suggesting an 8% price drop if the U.S. government were to follow suit. Instead, we focused on the debriefings to understand why the price drops occurred even though the initial values and constraints in both games were similar. In conversations during and after the game, players cited confidence in the competitive case as a reason to take risks and rely on the Naval-guess scenarios rather than safeguarding against the worst-case scenarios. They assumed that in the game world, they must be reaching their best-guess targets if they are remaining in a competitive market. The monopolistic sellers were free to focus only on the lowest possible profit and ensure that they satisfied their stakeholders. The successful shipyards in the competitive case also leveraged their learning curve for the second block. They created a brief window where the other player was almost entirely removed from the game because they could not compete with the learning effects. They were then free to ask for higher prices from the government even as the prices of their ship production went down. This helped transfer risk; they were able to take larger chances in the first block knowing that they would be in a strong position to force the Navy to internalize the risk in subsequent contracts. While this is not the way that we view long-term stability in the current sole-source environment, it provides more evidence that support over long periods of time allows for a shipyard to take its more optimistic forecasts and take risks. - 63 - -64- Chapter 5 - Implications & Future Work 5.1 Case Study Implications By creating a competitive market through investment or other means, the U.S. would be able to stimulate the market and drive down prices. This price drop depends on the willingness of shipyards to accept more of the risk and uncertainty. With another American shipyard, the industry would have to adapt to higher standards and expect to be closer to their optimistic targets in order to land contracts and survive. The current reality discourages financial prudence because of the interests in national security. The game provides insight into the policy of spending all of the allocated funds. While this occurred in a quarter of the monopolistic games, it never occurred in the competitive environment. Moving to a competitive case would not only drive down prices through shipyard production, but also by removing disincentives from the government's side. The players' actions reveal that they placed more importance on keeping the shipyards healthy in the monopolistic case and that the yards played for longer contracts. While the requirement for work for seven of the ten years was never broken, players did ignore the best cost goals to compensate. We find that the most significant driver in the negotiation is the promise of continued work through uncertainty. From a game theory perspective, we draw from a previous thesis in the shipbuilding study by Dominic Alvaraan [40]. He explores an extension of principle agent theory where the Navy may choose to continue working with the shipbuilder if it trusts it, or it may terminate the contract and end the game. The shipyard may execute the contract as written or "betray" the shipyard and receive a greater benefit through contract manipulation. While this research game has assumed the shipyard will always execute the contract as written, it provides insight into the power structure that drives this theory. In the sole-source environment, the shipyard players were more likely to lie as they had the ability to gain leverage by creating a false baseline for their performance. In the competitive case, the Navy players were more likely to lie since they could distort the baseline used to compare shipyards to one another. This survey data strengthens the principle agent theory analysis and provides a basis to use it in a competitive environment where the power roles are reversed. - 65 - The game theory analysis from Chapter 3 focused on the consequences of game theory where players are theorized to move to the Pareto front and then slide along it, only accepting Pareto dominant improvements. We see from the tradespace analysis that players are more likely to select boundary conditions of a front, slide along it until they come to a point where both conditions may be satisfied or they find that no such point exists. At this point, they will then suggest another set of Pareto front conditions and repeat the process, comparing equilibrium points until they are satisfied. 5.2 Game Design Implications We have shown how a research game is useful in analyzing the negotiation process. It does not make specific recommendations about numbers associated with policy changes, but brings up system changes that are not inherently obvious such as the removal of full government allocation strategies. It provides insight into processes such as negotiation by creating a space where qualitative and quantitative information may be tracked in tandem to explain moves that do not make sense according to game theory because they are not Pareto dominant. We observed that repeat players of the game were not significantly different than firsttime players in the amount of compromises they had to make, or in their ability to reach their goals. Where they stood out was in their ability to explain the system to the researchers and how their negotiation strategy evolved. They were able to provide additional insights into the power dynamics of the game that supported the survey data and into theoretical cases that could be developed into future work. The one trend where repeat players differed from first-time players was that they understood the interface much better. As people explore the game environment and become accustomed to the tools, they are free to focus more on the mechanics and dynamics and provide meaningful feedback in the debriefing sessions. Research games in this field should focus on the process by which goals are achieved. By definition, games are never the most efficient way to reach a goal. We would not recommend a game to create the best contract; we would recommend a game to study how contracts are made. A standalone simulation is more effective in optimizing values than human players will ever be able to, as seen in how humans explore the contract tradespace. The insights gleaned from this game are important because they can highlight the flaws in the human dynamics and provide - 66 - training to work around these errors. 5.3 Future Work ColumBID is currently presented as a game with a monopolistic and competitive case, designed to explore the negotiation process. It is currently limited in scope to the table between shipbuilders and the government. This section offers future work aimed at improving the shipbuilding process by identifying the system responses to human-influenced drivers. Because of the flexibility included in the system design, the game is capable of expanding the amount of players involved to include Congress and the supply chain members as part of the negotiation and resolution process. Scenarios could also be designed with cost-plus contracts instead of 70 fixed-price contracts through careful management by the game master. With expanded time constraints, the game could be expanded in scope to include multiple contracts. Figure 22: Currently existing game variants - 67 - 5.3.1 Supply Chain Expansion Shipyard N avy L(Congress) Ai Shipyard ae~a Figure 23: Supply Chain Expansion Variant The supply chain is responsible for much of the uncertainty in projected shipbuilding costs. Because of the specialized nature of shipbuilding, government-furnished materials are often bought by the government for the shipyards to use. Similar to the number of shipyards over time, the number of suppliers has also been reduced and they may be in monopolistic situations for specific parts. This may be responsible for the shipyard's ability to reduce cost pressure by passing it up the supply chain. By including extra players in the role of material suppliers, the game may be expanded to a five-player scenario with a supply chain which allows for multiple levels of negotiation. While the time required to explain and execute the game scenario is infeasible in the current study's time restrictions, future work could include these extra players in a similar scenario. The uncertainty in the current scenarios is currently not assigned a given distribution, nor is it assigned to anything else aside from technological maturity and material costs. - 68 - 5.3.2 Congress as a Player Congress Shnipyard Congress Shipyardi Figure 24: Congress as a player variants The current scenarios include Congress as an external player, who affects the gameplay by setting the budget constraints on the government player. A feasible deal may be constructed by finding a position where the set of possible deals intersects with a Pareto front of optimal outcomes for both players. When plotting out the trade space, it is possible that the negotiation process may be taking place in an environment where no feasible deal can be made. Because the budget determines the shape of this trade space, we may choose to create a scenario with no win- 69 - win outcome. In the terms of game mechanics, the budget will be set to a price where it is impossible for both the government to stay under the budget and for the shipyard to make any profit. This would provide evidence that the government may be placed in this position occasionally if the scenario behavior mimics real world cost overruns. Congress could also be included as a player within the system. The simplified system assumes that Congress talks directly to the government player, who then converses with the shipyards and their stockholders. In reality, the shipyards exert pressure by talking to the representatives in their district. As key industry players, they wield significant political power and can ask for more money to be allocated in the national budget. Similarly, Congress has decisions to make on whether or not they accept the deal proposed by the negotiators. The current goals include limits on ships per block and idealized building rates. Because of the term limits in the U.S. government, senators may be hesitant to commit to deals which extend past their effective time in office. New faces in government can lead to reworked future plans and changes in prior commitments. By including Congress as another player, we can explore the feedback loops outside of the formal command chain. 5.3.3 Cost-Plus Contracting ColumBID currently uses fixed-cost price contracts. In discussions with the program managers in the Navy Yard, talks revealed that contracts seem to vary from fixed-cost and costplus structures through cycles; each contract type appears to be favored during different periods of time. While the gameplay in ColumBID does not disallow the creation of cost-plus contracts, it would be possible to create a similar scenario in terms of costs while forcing the players to create cost-plus contracts. The game master would have to calculate the final contract price after resolving the uncertainty in the ship cost. This detail is already included in the game design as part of the block feature, so it would require little adjustment in the underlying model. This scenario would be useful as a test bed for the Navy to see if there are certain cost regimes where one contract type outperforms the other. 5.3.4 Multiple Contracts - 70 - The current scenarios include options by both sides to invest in a shipyard's infrastructure. However, infrastructure development is typically a decision for the long run, when the improved capacity is realized in subsequent contracts. Likewise, the notion of trust as an important factor in negotiation reveals itself over many contracts. A useful variant of the game would be to either run a long session where several contracts are negotiated in succession or with the same group of players multiple times. This would put much more of a focus on the strategy of the negotiators rather than the individual tactics that can win a contract in the short term. While we see some evidence of players willing to take worse positions in order to secure the entire contract, the results of each block provides new pieces of information for future negotiations. Players would develop a sense of how the negotiation process plays out between the particular set of people present and what their common tactics would be. In war, strategy is the overarching plan using all available resources. Tactics is defined as how to reach the particular objectives set out by the strategy. Strategy comprises different sets of tactics executed over time. Similarly, this variant expands on the idea of negotiation strategy versus negotiation tactics. This plays to the strengths of using a game's tool by exploring a space which would be impractical through repeated real-world trials. Furthermore, it could include the other variants suggested in this section to see how flexible a particular strategy is. ColumBID currently presents an amount of space for strategic consideration, but does focus primarily on the tactics of a single negotiation. By expanding scope in both model detail and game length, effective strategic behavior can be identified. 5.3.5 Further Qualitative Analysis Future sessions could include video and audio recording to facilitate qualitative analysis. The researchers recorded key pieces of private information that were shared during the negotiation. There was evidence of relationships, but not statistically significant. For example, sharing information about annual budgets in multiple cases led to the government player realizing that they did not receive a budget rollover. They were incentivized to fund the shipyard with the entire budget. A wider qualitative analysis could provide more insight on the personal dynamics during the negotiation process. For example, although we showed no relationship between the number of trade offers and the resulting contract, recording the conversation lengths -71- could provide evidence because the trade offers vary with times between offers. These recordings could supplement the human interactions found in the tradespace tracings. - 72 - Appendix A - Interview personnel records Interviews with Program Managers at the Navy Yard/Pentagon on February 21/22, 2013: PMS 450 (VCS); Attendees: Lisa Bonacic, Danielle Barton, CDR Terry Nawara, Lt Dom Alvarran, and Roi Guinto. PMS 500 (DDG 1000); Attendees: Edward McGill, Matt Evans, Joe Wineke, Chris Covalt, CDR Terry Nawara, Lt Dom Alvarran, Roi Guinto, and Eric Rebentisch. PMS 501 (LCS); Attendees: Ed Foster, CDR Cara Lapointe, Greg, CDR Terry Nawara, Lt Dom Alvarran, Roi Guinto, and Eric Rebentisch. PMS 317 (LPD); Attendees: Sharon Linsenmeyer, Cary Knapp, LT CDR Andy Gold, CDR Terry Nawara, Lt Dom Alvarran, Roi Guinto, and Eric Rebentisch. DASN(AP) Elliott Branch; Attendees: DASN (AP) Elliott Branch, Lt Dom Alvarran, Roi Guinto, and Eric Rebentisch. Interviews were also conducted remotely with: Carl Perry - Contracting Officer, Huntington-Ingalls (Ingalls Shipbuilding) C.L. Rector - Director of Contracts, Huntington-Ingalls (Ingalls Shipbuilding) Charles Zigleman - Contracting Officer, NASSCO Matt von Ruden - Contracting Officer, Vigor Shipyards - 73 - Appendix B - Aggregate sample demographics Distributions: Gender - Male or female players? M F Frequencies Level Count Prob F M Total 21 65 86 0.24419 0.75581 1.00000 Age - How old were our players? 50+ 30-34 25-29 18-24 Frequencies Level Count Prob -74- Level 18-24 25-29 30-34 50+ Total Count Prob 34 44 7 1 86 0.39535 0.51163 0.08140 0.01163 1.00000 Years of Education in a Technical/Scientific field - How educated were our players? 9+ 7-8 5-6 3-4 Frequencies Level 0 1-2 3-4 5-6 7-8 9+ Total Count 5 2 4 62 9 4 86 Prob 0.05814 0.02326 0.04651 0.72093 0.10465 0.04651 1.00000 -75- Years of Work in a Technical/Scientific Field - Did our players have work experience? 9+ 5-6 3-4 1-2 0 Frequencies Level 0 1-2 3-4 5-6 9+ Total Cour t 34 29 15 6 2 86 Prob 0.39535 0.33721 0.17442 0.06977 0.02326 1.00000 Years of Shipyard or Negotiating Experience - Were our players already familiar with the context? 9+ 7-8 5-6 3-4 1-2 0 Frequencies Level Count Prob -76- Level Count Prob 0 1-2 3-4 5-6 7-8 9+ Total 76 2 1 3 1 3 86 0.88372 0.02326 0.01163 0.03488 0.01163 0.03488 1.00000 Repeat player - Did this player already run a different version of the game? Y N Frequencies Level N Y Total Count 69 17 86 Prob 0.80233 0.19767 1.00000 -77- Appendix B - COUHES Materials (Surveys, Consent Form) CONSENT TO PARTICIPATE IN NON-BIOMEDICAL RESEARCH Production in the Innovation Economy: How to Create Excellence Through Competition and Benchmarking in the U.S. Shipbuilding and Defense Industry You are asked to participate in a research study conducted by Roi Guinto, a master's student from the Engineering Systems Division at the Massachusetts Institute of Technology (M.I.T.). Results from this study will contribute to a conference and/or a master's thesis. You were selected as a possible participant in this study because you have a background in a technical field such as engineering or mathematics. You should read the information below, and ask questions about anything you do not understand, before deciding whether or not to participate. * PARTICIPATION AND WITHDRAWAL Your participation in this study is completely voluntary and you are free to choose whether to be in it or not. If you choose to be in this study, you may subsequently withdraw from it at any time without penalty or consequences of any kind. The investigator may withdraw you from this research if circumstances arise which warrant doing so. * PURPOSE OF THE STUDY Negotiations involving acquisitions for the U.S. military attempt to mitigate future risk through various incentives and contract structures. The economic situation of the U.S. shipbuilding industry has led to market cases of a sole buyer and seller. In these cases, both sides of the negotiation are dependent on each other to fulfill their respective goals. Although their goals are at odds with each other, they must cooperate in order to be successful. - 78 - This study investigates strategic behavior in these contract negotiations, as well as possible effects of changes in the supply chain structure. Through a series of simulations, this study hopes to improve the understanding of the shipbuilding process. This new knowledge will be used to provide mutual benefits for both buyers and sellers in the defense industry. * PROCEDURES Participants will be randomly assigned to a negotiation position and seated at a computer station. The examiner will present the negotiation simulation to the participants and give a short tutorial on its uses. During the test session, participants will discuss a series of values to simulate the negotiation process and attempt to arrive at a mutually acceptable contract position. Participants may not look at each other screens, but may discuss freely otherwise. The negotiation involves the creation of a complete set of ships through the use of multiple contracts. Each contract represents a "block" and may be created individually or all at once. During this negotiation process, screen capture software will record the state of the contract as well as verbal discussions via a microphone. The research may record written observations. Participants have the option to exit the study at any point during the testing session. * POTENTIAL RISKS AND DISCOMFORTS This experiment involves interaction with a computer and communication with other experimental subjects. It is unlikely that you would encounter any risks or discomforts resulting from the study. * POTENTIAL BENEFITS You will receive no benefits from participation. The results may contribute to improved contract design and negotiations. - 79 - * PAYMENT FOR PARTICIPATION You will not receive any payment for participation. * CONFIDENTIALITY Any information that is obtained in connection with this study and that can be identified with you will remain confidential and will be disclosed only with your permission or as required by law. Results from the experiments will be shared with members of the shipbuilding study at MIT, including personnel of the U.S. Navy. All personally identifiable information will be protected using codes assigned during screening. Codes will be used on all testing materials (consent forms will be collected separately from results) and the map between personally-identifiable information and codes will be saved in an encrypted computer file for use by authorized personnel only. Following the completion of this study all personally-identifiable information will be destroyed. * IDENTIFICATION OF INVESTIGATORS If you have any questions or concerns about the research, please feel free to contact lead researcher Roi Guinto at (201) 887-3326 or faculty sponsor Professor Olivier de Weck at (617) 816-4956. * EMERGENCY CARE AND COMPENSATION FOR INJURY If you feel you have suffered an injury, which may include emotional trauma, as a result of participating in this study, please contact the person in charge of the study as soon as possible. - 80 - In the event you suffer such an injury, M.I.T. may provide itself, or arrange for the provision of, emergency transport or medical treatment, including emergency treatment and follow-up care, as needed, or reimbursement for such medical services. M.I.T. does not provide any other form of compensation for injury. In any case, neither the offer to provide medical assistance, nor the actual provision of medical services shall be considered an admission of fault or acceptance of liability. Questions regarding this policy may be directed to MIT's Insurance Office, (617) 253-2823. Your insurance carrier may be billed for the cost of emergency transport or medical treatment, if such services are determined not to be directly related to your participation in this study. 0 RIGHTS OF RESEARCH SUBJECTS You are not waiving any legal claims, rights or remedies because of your participation in this research study. If you feel you have been treated unfairly, or you have questions regarding your rights as a research subject, you may contact the Chairman of the Committee on the Use of Humans as Experimental Subjects, M.I.T., Room E25-143B, 77 Massachusetts Ave, Cambridge, MA 02139, phone 1617-253 6787. - 81 - SIGNATURE OF RESEARCH SUBJECT OR LEGAL REPRESENTATIVE I understand the procedures described above. My questions have been answered to my satisfaction, and I agree to participate in this study. I have been given a copy of this form. Name of Subject Name of Legal Representative (if applicable) Signature of Subject or Legal Representative Date SIGNATURE OF INVESTIGATOR In my judgment the subject is voluntarily and knowingly giving informed consent and possesses the legal capacity to give informed consent to participate in this research study. Signature of Investigator Date - 82 - FOR ADMINISTRATOR USE ONLY Participant ID Session ID Production in the Innovation Economy Pre-Questionnaire Below are some questions about your background before participating in the study. For the following questions please circle, mark or write the one best response. Your participation in this study is voluntary, and you may refuse to answer any questions or end your participation in the questionnaire at any time. I I I Gender 2 Age Female Male 18-24 25-29 30-34 35-39 40-49 50+ 0 1-2 3-4 5-6 7-8 9+ 0 1-2 3-4 5-6 7-8 9+ 0 1-2 3-4 5-6 7-8 9+ Years of college-level 3 (undergraduate + graduate) education in a technical field (sciences/engineering). Years of work experience 4 (professional) in a technical field (sciences/engineering). Years of work experience 5 (professional) in shipbuilding/contracting. - 83 - FOR ADMINISTRATOR USE ONLY Participant ID Session ID Production in the Innovation Economy Post-Questionnaire Below are some questions about the experiences you had while completing the design tasks. For the following questions please circle, mark or write the one best response. Your participation in this study is voluntary, and you may refuse to answer any questions or end your participation in the questionnaire at any time. Sbungly +- Disagree <-- Neutral -+ Agree -disag=e agree Don't know 6 I made significant compromises to achieve my goals. 1 2 3 4 5 6 7 9 7 I was able to achieve 1 2 3 4 5 6 7 9 1 2 3 4 5 6 7 9 1 2 3 4 5 6 7 my goals. I was able to navigate 8 and understand the interface. I was usually truthful in negotiation talks. 2 Other comments or feedback for the researchers: - 84 - References [1] MIT Game Lab IMIT Game Lab. (n.d.). . Retrieved May 21, 2014, from http://gamelab.mit.edu/ [2] Richard de Neufville, Frank Field, "Thesis Definition and Preparation: Some General Guidelines." MIT Technology and Policy Program, Internal Release, 10-Sep-20 10. [3] Mayer, I. S. The Gaming of Policy and the Politics of Gaming: A Review. Simulation & Gaming, 825-862. [4] Suits, B. (1978). The grasshopper:games, life, and Utopia. Toronto: University of Toronto Press. [5] McGonigal, J. (2011). Reality is broken: why games make us better and how they can change the world. New York: Penguin Press. [6] Herodotus (440 B.C.E.) The History of Herodotus: Book VII. [7] MITI 50 Exhibition Nomination. (n.d.). MIT150 Exhibition Nomination RSS. Retrieved May 21, 2014, from http://museum.mit.edu/noml 50/entries/1437 [8] The History Of Pong: Avoid Missing Game to Start Industry. (2009, January 9). . Retrieved May 21, 2014, from http://www.gamasutra.com/view/feature/3900/the history of pong avoid missing .php [9] The Entertainment Software Association. (n.d.). . Retrieved May 21, 2014, from http://www.theesa.com/facts/gameplayer.asp [10] Essential Facts about the Computer and Video Game Industry. (n.d.). . Retrieved May 21, 2014, from http://www.theesa.com/facts/pdfs/ESA EF 2014.pdf [ 11] Taylor, T. L. (2006). Play between worlds exploring online game culture. Cambridge, Mass.: MIT Press. [12] Bogost, I. (2011). How to do things with videogames. Minneapolis: University of Minnesota Press. [13] Abt, C. C. (1970). Serious games. New York: Viking Press. [14] Schell, J. (2008). The art ofgame design: a book of lenses. Amsterdam: Elsevier/Morgan Kaufmann. [15] Zimmerman, E., & Salen, K. (2003). Rules ofplay: game designfundamentals. Cambridge, Mass.: MIT Press. [16] Crookall, D. Serious Games, Debriefing, and Simulation/Gaming as a Discipline. - 85 - Simulation & Gaming, 898-920. [17] Related Historical Readings. (n.d.). The United States Chess Federation.Retrieved May 21, 2014, from http://www.uschess.org/content/view/7326/28/ [18] Flanagan, M. (2009). Criticalplay radicalgame design. Cambridge, Mass.: MIT Press. [19] Harteveld, C. (2010). Triadicgame design. London: Springer. [20] Mood, A. War Gaming as a Technique of Analysis. [21] Silver, N. (2012). The signal and the noise: why so many predictionsfail--but some don't. New York: Penguin Press. [22] Lee, D. B. Requiem for Large-Scale Models. Journalof the American Institute ofPlanners, 163-178. [23] Klopfer, E. (2008). Augmented learningresearch and design of mobile educationalgames. Cambridge, Mass.: MIT Press. [24] Ito, M. (2009). Engineeringplay a cultural history of children'ssoftware. Cambridge, Mass.: MIT Press. [25] Squire, K., & Jenkins, H. (2011). Video games and learning: teaching andparticipatory culture in the digital age. New York: Teachers College Press. [26] Gee, J. P. (2003). What video games have to teach us about learning and literacy.New York: Palgrave Macmillan. [27] Beer Game. (n.d.). MIT Forumfor Supply Chain Innovation. Retrieved May 21, 2014, from http://supplychain.mit.edu/games/beer-game [28] Riedel, J., & Hauge, J. State of the Art of Serious Games for Business and Industry. [29] Roceanu, I. Measuring the Effectiveness of Learning with Serious Games in Corporate Training. Procedia ComputerScience, 221-232. [30] Allison, G. T. (1971). Essence of decision; explainingthe Cuban missile crisis. Boston: Little, Brown. [31] An analysis of the Navy's Fiscal year 2013 Shipbuilding Plan. (n.d.). . Retrieved May 21, 2014, from http://www.cbo.gov/ [32] Performance of Major US Shipyards in 20th/21 st Century. Journalof Ship Production,24, 202-213. [33] Arena, M. V. (2006). Why has the cost of Navy ships risen?: a macroscopic examination of the trends in US. Naval ship costs over the past several decades. Santa Monica, CA: RAND. - 86 - [34] BEST PRACTICES: High levels of knowledge at key points differentiate commercial shipbuilding from Navy shipbuilding. (n.d.). . Retrieved May 21, 2014, from http://www.cbo.gov/ [35] Raybourne, E., & Bos, N. Design and Evaluation Challenges of Serious Games. [36] T. Husen & T. N. Postlethwaite, (eds.) (1989) The International Encyclopedia of Education, Supplement Vol.1. Oxford/New York: Pergamon Press, 162-163. [37] Glasersfeld, E. v. (2002). Radical constructivism in mathematics education. New York: Kluwer Academic. [38] Thorley, N. R. The conditions of conceptual change in the classroom. InternationalJournal of Science Education, 541-553. [39] Daalen, E. V. Functional design of games to support natural resource management policy development. Simulation & Gaming, 512-532. [40] Thesis (Nav. E.)--Massachusetts Institute of Technology, Dept. of Mechanical Engineering, 2013."June 2013." Cataloged from PDF version of thesis. Includes bibliographical references (p. 79-81). http://hdl.handle.net/1721.1/82300 [41] The Mercury Game. (n.d.). .Retrieved May 21, 2014, from http://mercurygame.scripts.mit.edu/game/ [42] Retrieved May 21, 2014, from http://investorrelations.gd.com/phoenix.zhtml?c=85778&p=irol-reportsannual [43] Retrieved May 21, 2014, from http://ir.huntingtoningalls.com/phoenix.zhtml?c=243052&p=irol-reportsannual [44] Movers and Shakers. (n.d.). Singapore-MIT GAMBIT Game Lab. Retrieved May 21, 2014, from http://gambit.mit.edu/loadgame/moversandshakers.php [45] Mitgutsch, K., & Schirra, S. (n.d.). Subversive Game Design and Meaningful Conflict. MIT Game Lab. Retrieved May 21, 2014, from http://gamelab.mit.edu/research/subversive/ [46] Anthropy, A. (2012). Rise of the videogame zinesters: howfreaks, normals, amateurs, artists,dreamers, dropouts, queers, housewives, andpeople like you are taking back an art form (Seven Stories Press 1st ed.). New York: Seven Stories Press. [47] Bartle, R. HEARTS, CLUBS, DIAMONDS, SPADES: PLAYERS WHO SUIT MUDS. http://mud.co.uk/richard/hcds.htm [48] Caillois, R. (1961). Man, play, and games. New York: Free Press of Glencoe. - 87 - [49] Personality and Play Styles. Retrieved May 21, 2014, from http://www.gamasutra.com/view/feature/6474/personality and play styles a .php?print--l [50] Alexander, J. (2002, January 14). Evolutionary Game Theory. Stanford University. Retrieved May 21, 2014, from http://plato.stanford.edu/entries/game-evolutionary/ - 88 - Gameography All games mentioned in this thesis are cited here. Call ofDuly 4: Modern Warfare. PC, Mac, PlayStation 3, Xbox 360, Wii. Developed by Infinity Ward. Activision, 2007. Depression Quest. Browser. Developed and published by Zoe Quinn. 2013. EVE Online. PC. Developed and published by CCP Games, 2003. EverQuest. PC. Developed and published by Sony Online Entertainment, 1999. FinalFantasy VII PlayStation. Developed and published by Square, 1997. FinalFantasyX PlayStation 2. Developed and published by Square, 2001. Movers and Shakers. Android. Developed and published by the MIT Game Lab, 2012. Number Munchers. PC. Developed by the Minnesota Educational Computing Corporation. Broderbund, 1986. Papers,Please. PC. Developed and published by Lucas Pope. 2013. Pong. Coin-op, Magnavox Odyssey. Developed and published by Atari, 1972. Reader Rabbit. PC. Developed and published by The Learning Company, 1986. Sid Meier's CivilizationIT PC. Developed and published by MicroProse, 1996. Sid Meier's Civilization III. PC. Developed by Firaxis Games. Published by Atari, 2001. Sid Meier 's Civilization IV. PC. Developed by Firaxis Games. Published by 2K Games, 2005. SimCity. Amiga, Macintosh, IBM PC, Commodore 64, SBES, Windows, Browser, Unix, Acorn Archimedes, Amstrad CPC, Sinclair ZX Spectrum, BBC Micro, Acorn Electron, EPOC32, FM- Towns, OLPC XO-1. Developed by Will Wright. Maxis, 1989. Sneak King. Xbox, Xbox 360. Developed by Blitz Games. 2006. Spacewar!PDP-1. Developed by Steve, Russell, Martin Graetz, and Wayne Witaenem, 1962. Super Mario Bros.. NES/Famicom. Developed and published by Nintendo, 1985. Tax Invaders. Browser. Developed and published by the Republican National Committee, 2004. No longer online. The Oregon Trail. PC. Developed by the Minnesota Educational Computing Corporation. Broderbund, 1974. World of Warcraft. PC. Developed and published by Blizzard Entertainment. 2004. Where in the World is Carmen Sandiego? PC, Amiga, Sega Genesis, NES, SNES, TurboGrafx- CD. Developed and published by Broderbund, 1985. - 89 -