Klitschko and Haye: The Game Theory Essay

Introduction

The use of game theory in real life is not restricted to the issue of economics, although economic benefits are frequently one of the factors involved. Generally, the application of game theory can be seen as a matter of taking the right decision, which can be used in every aspect in life. One of the recent news stories that can use game theory can be seen through the recent boxing match negotiation that took place between the WBO and IBF boxing heavyweight champion of the world Wladimir Klitschko and WBA boxing champion of the world, David Haye. The results of those negotiations are already known, however, the way they were taken and the outcomes in such negotiations can be applicable to game theory. A few modifications, which are not significant to the context of the story, were made so that the applicability of the game theory became more obvious. In that regard, the present paper will attempt to describe the situation of the negotiations between Klitschko and Haye in the form of game theory.

Description

The background of the story can be seen in that both champions, Klitschko and Haye, were both in a long quest to prove who the better champion inside the ring is. Both champions had started negotiations in the past, all of which eventually failed, leading to that each of them fought another opponent. At the present time, due to the lack of a worthy opposition in the current line of contenders, the most feasible option was for both champions to fight each other in a unification bout (Mannix 2011). The feasibility of such options can be seen in that no other match will bring so much interest of the public, both in Europe and the US, and accordingly, no other match will draw so much money to the table from viewers and TV channels. Klitschko was scheduled to fight another British challenger in Dereck Chisora, a fight that failed due to an injury sustained by Klitschko. With the scheduled fight felling off, both champions, Klitschko and Haye, found themselves free from any obligations, and thus, the negotiation for a unification bout had started.

The initial intention was for the unification bout to take place in April. However, it was stated that a British cable network, which is one of the sponsors that would have broadcasted the fight could not afford to buy the rights for two pay-per-view fights, after they already agreed to broadcast a fight of another British champion –Amir Khan. Thus, a new date was set to July with both champions preliminary agreeing that the new date is suitable for them. Considering the history of failed fight attempts between both champions, each of them had several strategies/choices to make, each of which had different outcomes.

For Klitschko, the strategies that were before him mostly revolved around two options. The first option was either to fight Haye and have the chance to become the undisputed champion of the world and receive the biggest payday of his life. The fight already fell off between both fighters, after which Klitschko had to search for a replacement, as a result of which he received less payment and suffered a period of inactivity, which is considered bad for boxers. Thus, Klitschko had another option, which is to fight Chisora, the fight with whom was already planned, but cancelled due to Klitschko’s injury. The payoff in such options is far less lucrative than the unification bout, but better than the option of the fight felling, and does not have a period of inactivity.

For Haye, the first options is the same as for Klitschko, i.e. fighting each other in a unification bout, having the chance to become undisputed heavyweight champion of the world, and receiving the biggest payday of his professional career, regardless of whether he wins or loses. The next option is to defend his title against mandatory challenger Ruslan Chagaev, a strategic option which is similarly less lucrative than the unification bout, but better than the option of not cancelling the fight at last minute and seeking replacement.

Representation

Although the case was modified a little, in general, it can be stated that such case is a representation of the prisoners’ dilemma. Accordingly, such story can be represented in various in a normal and extensive form. As the exact payoffs in each strategy are not known, for the sake of convenience, those payoffs will be represented in a three scale measure, 0, 5, and 10. Accordingly, the option will be considered as if they will be known simultaneously, prior to the bout. In fact such representation was taken due to the fact that such option happened in slightly different forms before, where the fight was scheduled, but other options were considered just before the fight. In that regard, ten is the best option; five is less attractive, but at the same time better than zero, which can be seen as the worst option. It should be noted that considering the fact that there is no opposition for both fighters, where both of them were criticized weak opposition, the payoffs for both fighters are assumed to be same when they decide to fight other challengers. At the same time, if they both fought each other the purse of the fight were decided to be split 50:50 in every aspect of the broadcast, and thus, the payoff for both fighters fighting each other in a unification bout is also known. The normal form of the game can be seen as follows:

The extensive form of the same story can be seen through the following graph:

Solution

The solution of the game can be seen through Nash Equilibrium, where the best response of a particular fighter is found in accordance to a particular response of the other one. One way to find Nash Equilibrium in this story is to find each fighter’s dominant strategy, i.e. a strategy which has higher pay off regardless of the response of the other fighter. For Klitschko, the dominant strategy will be to fight another fighter, and the same can be said about Haye. Eliminating non-dominant strategies will reveal the strategy the unique strategy, and the equilibrium in this game.

Looking at the way the events turned out in reality, it can be seen that both fighter chose to pursue fights with other fighters. Klitschko will fight Dereck Chisora, while Haye will most likely to face his mandatory challenger, Ruslan Chagaev. Despite the fact that in both cases, the strategic option of fighting each other will be the most feasible, not to mention that it will be the most demanded by fight fans around the world, such option was avoided by both fighters, mostly by Klitschko, due to his fear that it will be cancelled at the last minute. For Klitschko, if he chose to fight a unification bout, which might be eventually cancelled, might lead not only to financial losses, such as those represented in the created game, but also to that he will not fight in more than 9 months, which is a disaster for a professional boxer. For Haye, the indication of the loss can be seen the injury sustained by Klitschko, for which the fight with Chisora was initially cancelled. Haye will be almost inactive for the same period as Klitschko, and the decision to fight another challenger at the last minute will be not wise due to the fact that the replacement, i.e. Chagaev, is a southpaw, and thus, a different type of preparation is needed. As result, both “players” chose the strategy that led to an equilibrium considering the options that were before them (Slater 2011).

References

Mannix, Chris (2011), ‘Klitschko, Haye could restore interest in heavyweight division’, Sports Illustrated. Web.

Slater, James (2011), ‘Klitschko-Haye “Dead” – Wladimir Will Face Chisora, Haye Begins Negotiations To Meet Chagaev’, Eastside Boxing. Web.