Game Theory and Coke Promotions

MM: I’m glad you mentioned Coca-Cola. They were one of the early adopters of this smart promotional platform from a company that’s since gone out of business. It’s part of ePrize, now.

It was an interactive, smart promotions platform. It had mathematics underneath it that came from two PhDs in mathematics and game theory. Preference options would be similar to when you get an e-mail from Amex or Delta Airlines and they say invite you to make a bid on these four packages.

They invite you to make a bid, combining n-number of airline frequent-flyer points, membership points as well as hard dollars. They will choose five people over all the contest participants who got those packages.

BK: Cool.

MM: The net result is they end up collecting a lot of data from you. After you do several of these preference options they know, for example, that you’re single and that you have a proclivity for fun in the sun.

There are probably three or four more meaningful things they’ve learned from you as a function of your preference options or preference bids. It goes to the underlying game theory of how you elicit truthful information from anonymous actors.

So, game theory is just the mathematics or science of incentives to induce a particular behavior.

Coca-Cola was one of the very first adopters of this very sophisticated gaming platform. The challenge of course of that otherwise elegant concept is that it takes real rocket science. It takes somebody who’s got a PhD in quantitative methods and game theory to really understand how to construct and design these interactive promotions such that it produces the desired result.

BK: Agreed.

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