Prisoner's Dilemma
Critical Supply Stockpile
Critical Supply Stockpile is a Prisoner's Dilemma scenario. The core lesson: When two units in the same organization each hoard from a shared supply pool, both act individually rationally and collectively produce a worse outcome than coordinated, lower-volume ordering would have. A health system's supply chain team has identified a national shortage of a critical disposable used in high-volume procedures. Two hospital campuses in the same system have independently submitted emergency orders to the same regional distributor, each requesting three times their normal monthly volume. DecisionPlay maps the players, payoffs, and equilibrium dynamics that shape how this situation typically resolves.
The situation
A health system's supply chain team has identified a national shortage of a critical disposable used in high-volume procedures. Two hospital campuses in the same system have independently submitted emergency orders to the same regional distributor, each requesting three times their normal monthly volume. Central procurement has just learned that the distributor cannot fill both orders. The campuses acted without visibility into each other's requests. The materials shortage is real. The hoarding dynamic is now making it worse.
Background
Within-system supply hoarding is a prisoners' dilemma. Each campus materials manager is individually rational: protect your department from the shortage. But when both campuses request three times their normal volume from the same limited pool, the distributor fills partial orders for each, triggers a price spike on emergency allocations, and the system pays more for less supply than a coordinated single order would have secured. The individual incentive to hoard dominates the cooperative option, even when cooperation would produce a better outcome for both.
What this reveals
Why supply hoarding makes shortages worse
Supply hoarding in a shared system is a prisoners' dilemma at the departmental level. Each unit's decision to request early and heavily is rational in isolation. When units act simultaneously without visibility into each other's orders, the collective result is worse than any coordinated approach would produce. The supply chain function that sees both orders is the only actor with enough information to correct the dynamic.
How to counter it: Set a rule that emergency supply requests above 150% of normal volume require supply chain director approval before submission to a distributor. The approval step is what creates visibility that prevents the simultaneous hoarding problem.
A question to sit with
What shared resource in your system do departments draw from independently, without visibility into what the others are requesting at the same time?
Frequently asked questions
- What game theory concept does Critical Supply Stockpile illustrate?
- Critical Supply Stockpile illustrates Prisoner's Dilemma. When two units in the same organization each hoard from a shared supply pool, both act individually rationally and collectively produce a worse outcome than coordinated, lower-volume ordering would have.
- What is the situation in Critical Supply Stockpile?
- A health system's supply chain team has identified a national shortage of a critical disposable used in high-volume procedures. Two hospital campuses in the same system have independently submitted emergency orders to the same regional distributor, each requesting three times their normal monthly volume. Central procurement has just learned that the distributor cannot fill both orders.
- What does Critical Supply Stockpile reveal about how people decide?
- Why supply hoarding makes shortages worse. Supply hoarding in a shared system is a prisoners' dilemma at the departmental level. Each unit's decision to request early and heavily is rational in isolation. When units act simultaneously without visibility into each other's orders, the collective result is worse than any coordinated approach would produce. The supply chain function that sees both orders is the only actor with enough information to correct the dynamic.
- How do you avoid the trap in Critical Supply Stockpile?
- Set a rule that emergency supply requests above 150% of normal volume require supply chain director approval before submission to a distributor. The approval step is what creates visibility that prevents the simultaneous hoarding problem.
- What is the research behind Critical Supply Stockpile?
- Within-system supply hoarding is a prisoners' dilemma. Each campus materials manager is individually rational: protect your department from the shortage. But when both campuses request three times their normal volume from the same limited pool, the distributor fills partial orders for each, triggers a price spike on emergency allocations, and the system pays more for less supply than a coordinated single order would have secured.
- How long does Critical Supply Stockpile take to play?
- About 8 min, at core difficulty, across 1 decision points. It runs in your browser with no account and no sign-in.
Keep exploring
More Healthcare Ops scenarios, or browse all scenarios. New to this? Start with how DecisionPlay works or the game theory glossary.
Topics: supply-chain, procurement, coordination, shortages