The game theory of ATM locations

I came across a paper called ATM Banking + Game Theory = Profits on the website of the consulting company A.T. Kearney.

It’s interesting because the authors show how game theory principles can be used by banks to optimize ATM location. The key is that banks should not only consider a location’s demographics, but it should also consider how other banks are locating their ATM’s. This is particularly useful in a city where a bank will want to serve its customers but also reach other bank’s customers and get fees.

There’s also a blurb about location competition. They didn’t really explain the model (which is Hotelling’s game), but they did include an interesting graphic that summarizes the results.

The paper is a short six page read. While you probably won’t learn any game theory from it, it’s worth a read because it’s a nice application. Check it out.