How to maximise profits sustainably? : The Fishbank Simulation
Fishbanks is an online, interactive simulation created by MIT Sloan where players take on the role of commercial fishers. It offers a chance to understand through practising the system dynamics of common pool of renewable resources, a ocean of fish in this case. The goal is to devise and test strategies to sustainably fish from a an ocean so that marine stocks doesn’t deplete (fish stocks being a stand-in for any natural resource extracted by businesses).
But try as hard as we did -the fish were gone and the businesses dead by the 7th year.
(Skip ahead to the best strategy if you would like here)
The goal is to build the highest net worth while competing with other participants and adapting to fluctuating fish populations and catches. Players engage in various strategic activities, including:
Managing a fleet through buying, selling, and constructing vessels
Choosing optimal fishing locations
Engaging in negotiations with fellow players
The simulation allows instructors to implement different policy scenarios every simulation year and dynamically adjusts the cost of ships, availability of fish and other market conditions. The decision makers can
Choose to fish at the Deep Sea, Coast or not fish at all
Auctioning off or buy or build fishing boats to profitably fish faster before the resource eventually runs out.
This dynamic game challenges players to balance profit-seeking with resource management in a competitive virtual fishing industry year-on-year. The game ends once the rate of fishing increases and fish stock is depleted as in the real ocean. This subsequently crashes the value of the ships you hold on to as assets. But you can never know when this happens. The simulation handles this algorithmically based on how each player acts, just like in the real world.
You can try it out yourself here.
Why is this fascinating?
The goal of the game is to maximise profits to build the highest net worth. As you would expect, general market dynamics takes over at some point and a prevalent strategy emerges amongst the teams - Buy as many ships as possible early —> Fish as much as possible early before the stock runs out —> Sell the ships off before others notice the depleting fish stock.
But is this the best strategy for your individual company? Is there a strategy that could ensure continued fish stocks? Let’s examine the market dynamics here:
Year 1 -3 : Every company wanted to buy ships early, which meant extremely inflated prices in the starting years. Every company sent every ship to the deep ocean to get the biggest catch of fish to be profitable.
Year 3- 6 : Fish stocks show signs of depletion and every company tries to sell their ships glutting the market with ships and bringing down their prices.
Year 7 : The lean year. Fish stocks are close to depleted and ships aren’e selling. - END
But through mapping this dynamic early, what could you do to make your company profitable?
The best strategy?
Our team strategy evolved to take the following route :
Year 1 : Do not buy ships in the high price environment but build ships ( these ships only becomes accessible to you in the simulation in the next year ) at fixed cost to sell in the next years at a profit( selling price cost of ship + profits). Send all the ships you have to deep sea for fishing.
Year 2 - 3 : Build more ships and sell them to other teams at a price = cost of ship + profits if it had fished last year. Add few ships through buying cheap / building and send all the ships you have to deep sea for fishing.
Year 3 - 6 : Sell as many ships as possible at lower rates / at low cost of building to not hold on to the asset as prices fell.
Year 7 : The lean year. Fish stocks are close to depleted and ships aren’t selling. - END
This internal ship trading strategy must have worked, cause our company finished year 7 at the top of the leaderboard as the company with highest asset value with ~10k in total assets.
This gives me pause. Was the ideal solution, not to race to consume the natural resource before someone else did? Was there a pathway to sustainable fishing for all companies by trading ships with fishing companies who weren’t fishing from the same ocean and fishing from your ocean at replenishing rates?
In conclusion, while there were many arguments that followed for preventing the destruction of the natural fish stocks, such as regulation in fishing or shared understanding between companies to not fish above a limit ( needs a lot trust), I remain fascinated at figuring out a solution where profits and sustainability goes hand in hand.
Maybe there is a solution to be found with a Game theory approach here? Maybe understanding the Game theory approach to the Evolution of Trust is key? There’s more about game theory you can read here.
Reach out if you find a better strategy!