A Game-Theoretic Simulation Framework to Support Strategic Competition Education in Health Service Markets

Abstract

Strategic competition in health service markets requires managers to make pricing, marketing, and investment decisions under uncertainty, yet educational programs in healthcare management and dietetics lack experiential tools for teaching these competencies within a game-theoretic framework. This study develops and computationally validates SY142-Game-Theory-1, a computational simulation framework that models strategic competition between two asymmetric healthy living centers as a 36-month repeated Prisoner's Dilemma, integrating demand decomposition, net present value analysis, employee satisfaction dynamics with burnout thresholds, reputation feedback, and stochastic shock events. The simulation produces a valid and distinctly asymmetric Prisoner's Dilemma structure in which the established provider faces the classical temptation to defect while the new entrant's rational incentive aligns with cooperation; Axelrod-style tournaments across 22 strategies (96,800 simulations) identify Forgiving Tit-for-Tat as the top-performing strategy; Monte Carlo validation (n = 1000) confirms a statistically significant cooperation premium of 24.1% over Nash equilibrium; and sensitivity analyses across four parameters demonstrate robustness of all qualitative findings. The open-source framework bridges game theory, simulation-based learning, and health service management education, providing a computationally validated foundation for teaching strategic decision-making in competitive healthcare environments, with empirical evaluation of learning outcomes reserved for future work.