1. A Game Theory Analysis of the Final Five Laps of the 2008 Formula 1 Brazilian Grand Prix Jordan Diekema

2. Analyze the pit strategies of three key drivers for the final five laps of Brazilian GP Felipe Massa (Ferrari) Lewis Hamilton (McLaren-Mercedes) Timo Glock (Toyota) Goal: Show that the reason Glock chose not to pit was out of self-interest Show that what would normally be viewed as an irrational strategy was, in fact, rational

3. Lewis Hamilton McLaren- Mercedes Championship leader Felipe Massa Ferrari 7 pts down from Hamilton Timo Glock Toyota Rookie

4. Rain started with 5 laps to go Massa running in 1 st, Hamilton running in 4 th If Massa won, Hamilton needed 5 th or better Massa and Hamilton pit Change to intermediate wet tires Sensible strategy Glock does not pit Stays on dry tires despite rain Passes Hamilton while in pits Hamilton drops from 5 th to 6 th, out of contention Massa won Hamilton passes Glock on final corner of final lap to take 5th

5. Two basic strategies: Make a pit stop (P) Don’t make a pit stop (D) Reasons to pit: Wet track Change to wet tires for better traction Minimize risks Reasons not to pit: Very few Don’t waste time by pitting

6. Championship points Points based on finishing place 10, 8, 6, 5, 4, 3, 2, 1 Monetary rewards Comparative payoffs (+), (-) Reputation Comparative payoffs (+), (~), (-)

7. Risk discount factor multiplied by D payoffs 0 < r < 1 Helps to differentiate payoffs for P and D Example: Massa gets 10 pts if P Massa gets 10r pts if D D is far riskier strategy, and thus the payoff is discounted by r

8. P=Pit D=Don’t pit Row 1—Championship points payoffs Row 2—monetary reward comparative payoffs Row 3—reputation comparative payoffs

9. Used: Iterated Elimination of Dominated Strategies Sub-Perfect Nash Equilibria Results: Massa, Hamilton always choose P Glock always chooses D Holds for all three variables

10. Choosing D was rational for Glock Because of his perception of risk D was the strategy that maximized his payoffs