The Game Theory in Social Media

Is social media marketing the end of advertising, or is the rebirth? Perhaps, social media is merely a thing of the moment, and it will soon burn out following over saturation. The current trend in the use of social media for business is quite alarming. It seems no business can make it on the modern market without a good connection with the internet. Whether they have a website or not, social media is a tool that cannot be ignored. The current mania for social media is a cloud that holds marketers' vision with overheated hype as well as direct predictions. But this does not still bring us to the understanding of social media has become a major force in modern marketing.

One way of getting the right picture is through game theory. It is a science that creates the perfect toolbox to the deeper structure of marketer-consumer relations and the market scholar to get a clear picture of what social media does that is different from other marketing and advertising methods. This idea was originally developed to Cold-War geopolitical functions. The game theory sheds light on marketers' and consumers' conflicting and overlapping interests in the evolving world. Social is presented as a positive stage in an industry that was introduced by the web itself.

Can the Game theory be applied in Social Media?

Humans are defined as social beings. In other words, we all want to be close to other people, and our decisions affect others. Years ago, people would gather around a fireplace, just to feel part of a community. They used every tool available to communicate effectively. Without effective communication, it is very hard for humanity to co-exist, let alone have meaningful relations with the environment and other society members.

As society expanded and people moved further apart, there was a need for a new communication method. Hence, through technology, the internet has changed the world into a small village. We are connected to people from different parts of the world through this technology. And when social networks emerged, it was as though the world had broken its borders, and everyone was connected to everyone. The power and influence that social networks have impacted the society go beyond simply what or who we know. It introduces us to new ideas and to new people, making the world a better place.

In the contemporary world, people interact more through social media online than they do in real life. One seen as successful when they have more likes, comments, or when their content is shared. For the modern generation, the urge to succeed has become the fueling power behinds the decisions people make on online platforms. It determines what to post, and when to post is – it has become of the main motivating factors for our times.

We are all faced with decisions on a daily basis, and we must make them appear normal. And when it comes to the use of social networks, everyone seems to have a certain interest in one thing or the other that affects socialization.

In economic studies, social media has become a major subject. Many do not yet understand this; hence, using a mathematical model to correlation leading to success can be a great way to get there. Using Game Theory is a perfect way of building such a model.

Game Theory is a scientific model used to describe the interaction and decision-making of a finite number of players with a certain number of moves. The model is very instrumental in the attempt to understand behaviors and relationships in and between agents. It is a popular application in economics and extents to other fields like politics, sociology, biology, and psychology.

One term common in explain Game Theory is the Nash Equilibrium. This is a notion within the game, which represents that all participants have chosen the best possible strategies with a maximum payoff, responding to other players' strategies. A common assumption in Nash Equilibrium is that all player acts completely rational, and they make their decisions in the same manner.

Ashish Goel and Fernaz Ronaghi (2012) proposed a Game Theoretic Model for the economics of creating and consuming information on the social network with a Nash Equilibrium application. In this case, players are social media users, whereas strategies are signals like sharing, liking commenting, and many other similar moves. In their model, Goel, and Ronaghi highlight that the player chooses strategies where quality contributions reward the user with fame and utility. Another assumption is that all players strive for maximum utility. However, they have not stated specifically the social media they used in their study, but we easily conclude they have used Facebook. Also, their findings seem to the extent to all social networks.

Nash Equilibrium is not always applicable in the world of real problems, though, because of its naivety in assuming all players are rational decision-makers. It is true that human beings are rational, but in real life, there are some who make decisions without any form of rationality. This is the reason that the Quantal Response Equilibrium came into the picture. This approach gives players the choice of making non-optimal decisions. Therefore, this approach can be used effectively in explaining the role of game theory in social media.

Defining the terms

In explaining this relationship, we need to understand these terms used.

A social network is an interaction network where people get in touch with others, communicate, and share thoughts on a personal level and through groups. The social platforms offer a ton of content and information to the user. User-contributed content is more popular, although companies and organizations are also finding the network very useful for sharing information. Each user can interact with the content by taking one of several actions, including liking, commenting, and sharing.

A user gets more social statures based on the number of views, likes, and comments they have. These are called social signals, and the more one gets, the more popular they are perceived to be. Social status has been highly rated among users. A study by Huberman, Loch, and Oncular reports that a user is willing to trade off some of their material possessions to obtain the status.

- The game theory. Game Theory is defined as a study of mathematical models in which agents make decisions to gain payoffs. The agents can act together (in a cooperate state), or in conflict (alone). It has become a major reference in economics. There are different types of games. In some situations, the specific agent can be part of the decision, where the game symmetric. This means it does not matter which agent made a choice since the outcome is the same. Sequential or simultaneous games are also possible, depending on the choice order.

- Nash Equilibrium. This happens when all players choose the best strategy as the best response to other agents. A game with a finite set of players and strategies is defined as having Nash equilibrium.

- Goel's and Ronaghi's Model. They wrote a paper 'A Game-Theoretic Model of Attention is Social Networks.' Their models are based on the economics of producing content in online social networks like Facebook and Twitter. This model was built on a lot of assumptions; it describes how users perceive and exchange information. You begin by assuming that every user on the network has a relationship with at least one other user, and attention and information are the main motivation for user contribution and attention.

- Quantal Response Equilibrium. It is not every time that users make rational decisions. Sometimes they take steps that do not give the best outcome. In other words, humans are not perfect. Generally, each player does not know the other's value system; this is why many real-life games have incomplete or asymmetric information. The Quantal Response Equilibrium is an extended version of the Nash version, where, a rationality variable is present to add margin error.

- State of the Art. The game Rock, Paper, Scissors have been modeled by Batzilis et al., using game theory. They apply statistics from the game Roshambull, which is basically the same game, of Facebook to calculate the equilibria. The game is described as a 3x3 zero-sum game, in which zero-sum game means the sum of wins and losses is zero. The proposed that Nash Equilibrium is possible when participants for each throw of match expect an opponent to mix 1/3, 1/3, 1/3 over rock, paper, scissors.

These are strategies that are common in winning social media strategies. On one side, there are users who need more fame on their social networks, and they will do everything to ensure they get there. On the other hand, we have marketers who need to predict what consumers will do with their information. Social media has become the main form of communication, where users can interact easily. It has made the world a better place, and those who know what to do are using every tool in their arsenal to achieve their goal.

Social media marketing using game theory

Years ago, people sat around fires to share what transpired in their day and tell stories of what shaped the society. Today, social media has become that fire. The light from internet-connected devices lights the faces of many who are connected through social platforms. It may not be physical fires, but the same sharing of stories and creating relations remains the same.

Economic studies connecting social media has dwelt on how people make a decision. From a business perspective, there are a few things that emerge from this evolution. Users can now discuss their experiences with brands or products, creating a large community of interest that put pressure on brands. The idea of shaping our world through sharing of stories creates a perfect environment for consumers are producers. It is important to understand how these connections are formed on social media, their purpose, and how they can be leveraged to get the most from social media marketing.

Social media mechanics with game theory

There is an obvious need to take part in a social media exchange. Many have found it very challenging to effectively model how social systems operate, especially when new media and technology are taken into account.

Even though the term 'game theory' has a 'game,' it has very little to do with games are many would think. From the discussion above, we can say that the game theory seeks to understand how rational participants, bound by the set of rules. The game theory has been applied in social media to help us identify social media users' aims and what they do to achieve their goals. The 'players' are the users, both individuals and firms. Brands get to their information on social media to reach new customers, improve brand loyalty, and answer to consumer concerns. Private users want to keep in touch with their friends, stay up-to-date, and take part in social discussions on different subjects.

There is a need to gain powerful allies in the social status game. Both brands and consumers have varying objectives, but they all need social influence to get there. There is a limited supply influence on social media, and users compete for it. Many brands mistake seeing consumers or targets, some as enemies, instead of powerful assets.

Brands that cooperate with consumers by assisting them to achieve their objectives have a higher chance of winning the social media game. And the means brands have to offer social media users with the tools they need to grow their popularity, which gives them more power to influence conversions. In the end, brands can leverage their messaging and get more vocal support from a wider audience.

Social status is an important aspect of every human interaction, and one of the central drives. The significance of social status has been discovered in discovering that a part of the brain processes changes in a status called the striatum, which is the part that processes money. Researchers discovered that a higher social status triggers a sure and quantifiable neurological benefit. And social media is the main area that can give modern users these statuses. Increasing and measuring status with game mechanics can be done by creating content, sharing content, and challenging content.

Author: James Hamilton