Game Theoretical Approaches to Navy Budge Allocation
Abstract
Many agencies within the Navy are competing for a portion of the Navy budget to ensure their agency receives the maximum amount of funding possible. With a budget of $255.8 billion for FY24, it is imperative the Navy does everything in its power to make the most informed investment decisions.Consider a department that allocates funds to several subdivisions each fiscal year. We use mechanical design theory to create an investment decision based game that motivates each subdivision to report their annual budget prediction truthfully. Specifically, the department penalizes subdivisions for inaccurate budget predictions by giving the subdivision a smaller budget next year, and offers a bonus for subdivisions that predict their budgets accurately. We use Monte Carlo simulation to demonstrate our approach with a set of assumptions on how each subdivision behaves. The output of these simulation experiments provides a confidence interval for the budget each subdivision receives. Finally, the department can run stochastic optimization to determine the final budget allocation to each of its subdivisions to maximize the departments overall performance.
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 2023
- Accession Number
- AD1224707
Entities
People
- Merill D Ii Kline
Organizations
- Naval Postgraduate School