WASTE MINIMIZATION USING GAME

THEORY AND SYSTEM DYNAMICS

COURSE NAME - IE 694

M.Tech Seminar Report

By

Krishna Gupta
M.Tech First Year
(183190014)
IEOR , IIT Bombay
INTRODUCTION - We can generally see that in recent years growth of nation also
depends on urbanization . Whole society is benefited from construction industry .
Leading to which great amount of construction and demolition (C&D) waste has been
generated . Construction Industry doing greater participation in environmental
damage .
Major participant in C&D Waste management are government departments and
construction contractors . government supervision are the top priorities that affect
contractor behaviors Decision making department considered as most important
component of construction industry and C&D waste management.
.For the Constructor there are many ways for saving money by illegal dumping C&D
waste at landfills. In china dumping waste in landfill is one of most common method.
Doing which Current main target of C&D waste management team to control illegal
dumping and leading to sustainable development.
There are basically two ways by which we are trying to understand and resolve the
problem of illegal dumping.

(1) GAME THEORY APPROACH – so basically government department having

problem at what probability we should do supervision to reduce illegal dumping and
environmental harm. in that approach with the help of public participation in game we
will understand how game theory approach can restrict illegal dumping.

(2) SYSTEM DYNAMIC APPROACH system dynamic approach to determine what

should be the waste disposal charging fee for C&D waste reduction. however most of
the existing studies are based on the Field investigations and questionnaire survey .there
is lack of clear decision making description in different situations from the theoretical
point of view.
Therefore it is very important to understand the decision making of most of the
participant under difficult situations having complexity.
we will understand here simple model based on given decision behaviors to determine
appropriate value of penalties. This study can be used as the basis of efficient
environment friendly C&D waste management framework.

CHAPTER (1) GAME THEORY APPROACH

Game theory is the study of the strategic choices of decision-makers and it has been
widely applied to many fields in the last decades, such as economic behavior, trade
strategy, political science, etc. (Von Neumann and Morgenstern, 2007).
Here game is between two partners, 1. constructors 2. government department
both are having different objectives.
for contractors objective is how to dispose the huge amount of construction waste.
Behavior strategy of construction contractors are not independent while seeing
government strategy they should also look on the strategy of other contractors
 For government department objective is how to supervise illegal dumping . In
addition to analyzing environmental pollution condition result from illegal dumpling
government should also consider the strategies playing by the contractors .
Hence we can observe game is between two aspirants of gradual observation. which lead
to dynamic Game and hence utilities analysis by expectation.

1.1 THE DECISION MAKING GAME MODEL WITHOUT PUBLIC

PARTICIPATION

1.1.1 MODEL HYPOTHESES

we are dealing with simple model here and we will make here following hypothesis.
(1) government department will always take the decision of either do supervision or not
based on expected revenue they are getting by doing the supervision
(2) construction contractors will choose decision of illegal dumping will always depend
on the benefit they are getting by choosing illegal dumping as compared to legal
dumping.
(3) government department can do supervision by two methods random inspections or
full scale inspections. When we are going with random supervision government will
have to pay less to supervisor as compare to full scale inspection where C is probability
of doing supervision μ= 0 no inspection while μ = 1 full scale supervision while 0<μ
<1 random scale supervision .
(4) contractors will choose illegal dumping by probability is λ while probability by
which contractors will do legal dumping is 1 - λ government will only be able to find
what contractor doing only if they do supervision.
(5) if contractors not follow the rules government impose a penalty F . A fraction
of that penalty will be revenue for the government administrators αF (0 < α <1)

MEANING OF PARAMETERS
Parameters Descriptions
μ Supervision probability of government management department
B Normal revenue of government management department
C Government management department supervision cost
F Fine that government management department will impose
αF Part fine revenue for government management department
λ Probability of contractor for illegal dumping
b Core or main income of contractors
e Illegal dumping benefits for contractors
D Illegal dumping damage on the society
1.1.2 GAME MODEL(NO PUBLIC PARTICIPATION) for both government and
construction contractor we will understand expected return from illegal dumping.

INCOME MATRIX with the help of below matrix we will calculate expected revenue
of government and contractors
GOVERNMENT CONSTRUCTION CONTRACTOR
ILLEGAL DUMPING LEGAL DUMPING
SUPERVISION
B-C+ αF-D, b+e-F B-C,b

NON SUPERVISION
B-D, b+e B ,b

FOR CONTRACTORS
E1 = b +e – μF (expected return contractors will get from illegal dumping)
E2 = b ( expected revenue from legal-dumping contractors will get)
E(C1) = λ E1 + (1- λ) E2 (total value of expected return for contractors with legal
or illegal dumping )
FOR MANAGEMENT DEPARTMENT
E3 = λ αF - λD + B - C ( expected return from supervision)
E4 = - λD + B ( expected revenue from not supervision)
E(M1) = μ E3 + (1- μ) E4 ( total expected value generated by either doing
supervision or not . )
Replicated dynamic game equation for the construction and government department
we constructed equations from RD game equations we calculated the stable points of
expected value.
H ( λ) = (λ) (1- λ)(μF – e ) (1)
G(μ) = (1- μ) (μ)(-C +λ αF) (2)
Stable points for contractor (λ = 0,1 and μ = e/F) by making RDGE equation H ( λ) =
0 Eqn (3) equal to zero similarly Stable points for contractor (μ = 0,1 λ = C /αF) by
making RDGE equation G(μ) = 0 Eqn (4) equal to zero .
After getting stable points according to differential equation and dynamic game theory
of replication possible points should meet the condition dH ( λ) / d λ <0 and
dG(μ) /dμ)<0 respectively.
dH ( λ) / d λ = (2λ-1)(μF – e ) for contractors stable strategy (3)
dG(μ) /dμ) = (2μ-1)(C – λ αF) for government stable strategy (4)
1.2 DECISION MAKING UNDER PUBLIC PARTICIPATION
1.2.1MODEL HYPOTHESES considering limited amount of resources government
department have we are including public participation in that game if we not do so some
contractors who violated the rule may be missed . So hypotheses made are respectively.
(1) participation of public in reporting illegal dumping is ξ (0<ξ<1) when ξ is equal to
one that means public must report the illegal dumping.
(2) there will be reputation loss for the contractor if public choose to report the illegal
dumping and contractor violets the rules.
(3) Government will loss credibility of public is reporting for illegal dumping and
government is not doing supervision.
(4) If public do not report the illegal dumping there will not be influence on either game
player.
MEANING OF PARAMETERS
PARAMETERS DESCRIPTION
ξ public participation probability in illegal dumping
x loss of contractors due to public participation
Y loss to perform failing to do their supervision duty

1.2.2 GAME MODEL (UNDER PUBLIC PARTICIPATION) Game tree has been
represented based of the above hypotheses

FOR CONTRACTORS
E5 = b +e – μF - ξX,( expected return contractors will get from illegal dumping).
E6 = b ( expected revenue from legal-dumping contractors will get).
E(C2) = λ E5 + (1- λ) E6 (Total value of expected return with legal or
illegal dumping ).
FOR MANAGEMENT DEPARTMENT
E7 = λ αF - λD + B - C ( expected return from supervision )
E8 = - λD + B - ξY (expected revenue from not supervision)
 E(M2) = μ E7 + (1- μ) E8 ( total expected value generated by either doing
supervision or not ).
.

Fig 1 Game tree(public participation) Ref [1]

Replicated dynamic game equation similarly for the construction and government
department we constructed equations from RD game equations we calculated the stable
points for expected values.
H ( λ) = (λ) (1- λ)(μF – e +ξX) (5)
G(μ) = (1- μ) (μ)(C – λ αF +ξY) (6)
Stable points for contractor (λ = 0,1 and μ = e-ξX /F) by making RDGE equation
H ( λ) = 0 Eqn(5) equal to zero similarly Stable points for contractor (μ = 0,1 λ = C -
ξY/αF) by making RDGE equation G(μ) = 0 Eqn(6) equal to zero .
After getting stable points according to differential equation and dynamic game theory
of replication possible points should meet the condition dH ( λ) / d λ <0 and dG(μ)
/dμ)<0 respectively.
dH ( λ) / d λ = (2λ-1)(μF – e +ξX) for contractors stable strategy
dG(μ) /dμ) = (2μ-1)(C – λαF- ξY) for government stable strategy
1.3 DISCUSSION AND OUTCOME (RESULT)
(1) DECISION ANALYSIS ( NO PUBLIC PARTICIPATION)
 1.3.1 for Construction contractors when F >= e and μ = e/F there H ( λ) = 0 all
values of λ stable points values . however if we see values they are not meeting
condition of evolutionary stable strategy .
when F >= e and μ > e/F, λ = 0 stable strategy legal dumping .if the probability of
supervision will be greater then e/F contractor will do legal dumping.
when F >= e and μ < e/F , λ = 1 stable strategy illegal dumping. contractor will do
illegal dumping when probability of supervision less then e/F.
when F < e and μ < e/F λ = 1 only stable long term strategy illegal dumping. as
penalty is less then revenue for contractors probability of doing illegal dumping is 1.

..Fig 2 decision of contractors Ref[1]

from the analysis and figure it can observe that there will be no effect of applying high
amount of penalties on the contractor for stopping illegal dumping by the government
department until govt department are not willing to do proper supervision. probability
of supervision(μ > e/F) will tightly control the illegal dumping.
1.3.2 For management (government ) department when C <= αF and λ = C /αF
there G(μ) = 0 all μ stable points values not Meeting condition of evolutionary stable
strategy however all the possible μ are stable points
when C <= αF and λ > C/ αF , μ = 1 stable strategy legal dumping .that shows if
probability of illegal dumping by contractors greater then C/ αF government will do
supervision strategy.
when C <= αF and λ < C /αF , μ = 0 stable strategy illegal dumping as long as
probability of illegal dumping less then C /αF govt department will not go for
supervision strategy.
when C > αF and λ < C /αF , μ = 0 only stable strategy illegal dumping govt will not
opt supervision strategy.

.
. .. Fig 3 decision of government department Ref[1]
we can noted that from figure if revenue from penalty for govt are less than supervision
cost . govt will not do supervision when supervision cost gradually decreases and are
made less then revenue from penalties then probability of illegal dumping will determine
whether govt should do supervision or not . how ever when contractor are willing to do
illegal dumping with higher probability greater then C/ αF its govt job to do
supervision.
1.4 DECISION ANALYSIS ( WITH PUBLIC PARTICIPATION)
1.4.1 for Construction contractors when F >= e - ξX and μ = e- ξX/F there H ( λ) =
0 all λ stable points not stable strategy
when F >= e- ξX and μ > e- ξX /F, λ = 0 stable strategy legal dumping
when F >= e - ξX and μ < e- ξX/F , λ = 1 stable strategy illegal dumping.
when F < e - ξX and μ < e-ξX/F λ = 1 only stable long term strategy illegal dumping.

fig4 decision of contractors with public

participation Ref[1]

irrespective of penalty imposed by the govt department contractors will do illegal

dumping until probability of supervision is more then e- ξX /F.
1.4.2 For management (government ) department
when C <= αF+ ξY and λ = C - ξY/αF there G(μ) = 0 all μ stable points not stable
strategy.
when C <= αF+ ξY and λ > C- ξY/ αF , μ = 1 stable strategy legal dumping .
when C <= αF+ ξY and λ < C- ξY /αF , μ = 0 stable strategy illegal dumping.
when C > αF+ ξY and λ < C- ξY /αF , μ = 0 only stable strategy illegal dumping govt
will not opt supervision strategy. contractors probability of illegal dumping lower then
λ.
fig5 decision of government department with
public participation Ref[1]

1.5COMPARISON OF RESULTS
1.5.1 GOVERNMENT DEPARTMENT we will calculate here expected revenue
chance with supervision or without supervision under two situation with public
participation or without without public participation respectively.
S(1) = E(3) – E(4) = λ αF - C
S(2) = E(7) – E(8) = λ αF – C +ξY
S(1) change in expected revenue of govt without public participation
S(2) change in expected revenue of govt with public participation

Fig 6 change in expected revenue of government

department with or without public participation Ref [1]

it can be seen from the graph that when the public

participation is happening in reporting dumping
.government department getting more revenue then without
public participation. ξY is adding more in S(2) as compare
to S(1).

1.5.2 CONSTRUCTION CONTRACTORS we will calculate here expected revenue

chance with illegal dumping or without illegal dumping under two situation with public
participation or without public participation respectively.
S(3) = E(1) – E(2) = e – μF
S(4) = E(5) – E(6) = e – μF - ξX
S(3) change in expected revenue of contractors without public participation
S(4) change in expected revenue of contractors with public participation.

Fig 7 change in expected revenue of contractors with or without

public participation Ref [1]

from the value of S(3) and S(4) it can be seen that with public
participation chance of penalty on contractors more if they do
illegal dumping and losing value ξX more as compare to no
public involvement

1.6 CONCLUSION when the public participation will occur expected revenue of
contractors will reduce drastically will leading to reduce in probability of illegal
dumping .which leads to less environmental pollution leading to healthy society also
expected revenue of government will increase . hence we can say that government
should do supervision of illegal dumping with public participation.

1.7 WHAT CAN BE DONE MORE ? To make model more realistic all the
relationship cannot be linear there should be non linear relationship like penalty on
contractors should depend on amount of waste dump non linearly and hence amount of
waste should also be included and more variables can be included to make it more
realistic like including recycling of waste material .
 CHAPTER 2 SYSTEM DYNAMICS APPROACH

in that approach we will try to understand how system dynamic approach can fix the
waste disposal charging fee (WDCF) for minimizing solid waste and increase the
recovery of wasted material in construction industry .
We will understand model based on below objectives
(1) Reduce waste generation and land filling waste generation is leading to
environmental pollution and land filling also making more pollution in environment SD
model should consider that scenario too.
(2) Maximizing the waste recycling Whatever the waste produced can be use again if
proper recycling of waste is done we will understand what will the effects if amount of
recycling waste increases.
(3) Minimizing the waste dump inappropriately there should be waste dump at
landfills rather then inappropriate areas so we will understand what WDCF we should
impose to reduce that problem.
2.1 SD BASED MODEL FOR DETERMINING WDCF

CASUAL LOOP DIAGRAM in determining WDCF is affected by many variables as

shown in fig1 each of the arrow represent here cause and effect relationship + sign
indicate the arrow tail variable will increase as arrow head variable increase.
ex. increasing in penalty will increase cost of violation of regulations.

According to principle of system dynamics we can see from the fig1 there are 4
feedback loops three are negative and one is positive .

Fig 1 casual loop diagram of the model Ref [3]

Loop 1 it is a negative feedback loop an
increase in the amount of land filled C&D
waste will increase constraints of waste land
filling which results in increasing efficiency
of compliance with regulation which
increase incentive of waste reduction and
waste decreasing rate which will decease
C&D waste generation leading to which
C&D waste land filled decreases.

Loop 2 is a negative feedback loop . there is

an increase in the amount of C&D waste
generated, which raise efficiency of
compliance with regulations and incentive of
waste reduction would increase a. which will
accelerate the waste decreasing rate, which
decreases the amount of C&D waste generated .

Loop 3 + ve feedback loop Loop 4 -ve feedback loop

Similarly loop 3 and loop 4 can be observed as positive and negative feedback loop
respectively. Combination of all that 4 loop is making model understandable however
other variables are also added to complete the model.

2.2 STOCK FLOW DIAGRAM based on the above described casual loop diagram
some details are added to make stock flow diagram .this will increase further
understanding on interactive mechanism.
2.3 SIMULATION RESULTS AND DISCUSSION: effectiveness of regulation
depends on the completeness of regulation, effectiveness of supervision, and
regulation enforce ability . According to survey found that regular enforcibility is
most important variable so based on the previous trends we found there values .25, .25
and .5 respectively . All 3 variable can range from can range from 0 to 1 respectively.
So there are 31 total variable and stock and all variables equations defined and related
from previous trend of variables in a particular area.

. .Fig 2 stock flow diagram of the model Ref [3]

2.3.1 MODEL TESTING to taste the model they range WDCF amount ranging from 0
yuan/ ton to 100 yuan/ton and then the plot amount of recycled waste vs time curve at
different value of WDCF. Our normal intuition say that amount of recycled waste should
increase over time as we increase WDCF price . Stock flow model simulation shows the
same thing.

Fig 3 extreme condition test of

the model Ref [3]
2.3.2 RESULTS FROM SIMULATION the main purpose of simulating this model is
to check how amount of waste will respond to change in WDCF thus independent
variable in simulation is WDCF .In the policy analysis, six additional
alternatives are designed and simulated, in which the WDCF is 20, 60,
80, 100, and
120 yuan/tonne respectively .

FIG[4a] shows that although the absolute amount of C&D waste

generated increases year-by-year , there is a general tendency of
obvious decline in the amount of C&D waste generation when the
WDCF is raised. the amount of generated C&D waste in 2030 will be
highest in curve 1 .curve 5 gives us the best output producing least
amount of C&D waste generated.

FIG[4b] from the point of view reducing amount of of C&D waste land
filled
declines sharply when the WDCF is higher than 80 yuan/tonne This
indicates clearly that from the perspective of C&D waste reduction,
the C&D WDCF should not surpass 80 yuan/tonne.
. .Fig 4 RESULT OF SIMULATION Ref [3]

FIG[4c] it can be seen from the figure for curve 1 and curve 2
amount of C&D
waste recycled is less over a span on time this is due to the fact that
pre capital cost of recycling is yet higher then the pre capital cost of
waste land filling. for the curve 4 and curve 6 amount of waste
recycled shows good response.

FIG[4d] it can be seen that amount of waste illegally dumped is

minimum during curve 5 if we increasing price beyond curve 5
amount of waste illegally dumped increases this is inconstant with the
general understanding when the price increases beyond optimal point
project contractors will take the risk of dumping the generated waste
at inappropriate area rather then disposing at regular landfills
therefore the WDCF price should not increase beyond the value of
WDCF on curve 5.

CONCLUSION in that model we seen that government cannot set the

WDCF price as higher as they want because there is trade off between
various parameters like regular dumping areas and inappropriate
dumping areas . hence we should look for the optimal price based on
the equations functions stock and variable so system dynamics can
help us to solve complex problems.

2.4 WHAT CAN BE DONE MORE ? : based on my understanding

variables value or equations, , functions can be more clearly define.
relation between cause and effect can be more realistic. more
practical cases can be involved in model for making it more trust able
and robust.
REFERENCES :
Ref[1]Considerations for better construction
and demolition waste management: Identifying
the decision behaviors of contractors and
government departments through a game
theory decision-making model
https://doi.org/10.1016/j.jclepro.2018.11.262
https://www.sciencedirect.com/science/article/pii/S0959652618336655
#bib30

Ref [2] https://plato.stanford.edu/entries/game-

evolutionary/
Ref [3] A system dynamics model for
determining the waste disposal charging fee in
construction https://doi.org/10.1016/j.ejor.2014.02.034
https://www.sciencedirect.com/science/article/pii
/S0377221714001696