At the age of 26, Balázs Sziklai had a stable job at a market research company, where he could work in a good environment with friendly colleagues for a market salary. Yet he was not satisfied. “I told my future bosses at the job interview that I would like to go back to university to study another degree programme, because after the age of 30 you’re just growing stupid. When I said that, I realised that the only other people in the room were over 30. They laughed and said: we need this honest guy. I got the job”.
Two years passed, and something kept Balázs on his toes: he walked along El Camino leading to Santiago de Compostella. “I wanted answers, but after I came home I was a bit depressed because no angels came down from heaven, no one gave me the big solution to life”, says Balázs, but only later did he realise that the search was not in vain.
The trip later influenced his decision to apply for a bachelor’s programme in applied mathematics at ELTE. After the first few weeks, he knew immediately that he had made the right decision, because he was fascinated by the intellectual impact. “Well that’s when the angels came down from heaven,” he says afterwards.
He later applied to CEU for an MSc in Applied Mathematics, which was important to him for two reasons. He was taught by some of the most distinguished professors at ELTE and the Rényi Institute, and was awarded a study grant, which allowed him to quit his job at the market research company and focus entirely on his academic career.
He started his doctoral studies at ELTE in 2010. At the same time he took up a position in the gams theory research group at the Institute of Economics. This is still his main job, while he has also been teaching at Corvinus since 2015. His research focuses on strategic and decision-making situations where actors compete or cooperate with each other. Game theory examines both the equilibrium and fairness of the decision situation and the motivations and incentives of the individual players.
From junior fencing competition to Q1 publication
Balázs loves to draw inspiration from real life, to take a closer look at situations that actually happen. He never imagined that one of his publications would be inspired by a junior fencing competition.
My niece is a very promising fencer in her age group, but she only finished 12th in one of the competitions. That wouldn’t be a problem in itself, but he won seven of his nine matches, and the winner of the tournament won his matches by exactly the same margin. I was both outraged and felt that there was something to research here
says Balázs, explaining how one of his projects started.
Together with two of his colleagues, László Csató and Péter Bíró, they examined the rules for running each tournament from an efficiency point of view. Efficiency in this respect covered which tournament format could reflect the real, but hidden, order of strength of competitors. This showed that running the niece’s competition was one of the less efficient competitions. The most effective system has been the Swiss-style tournament, which is based on the principle that each round pits the same or similar performers from the previous round against each other.
We didn’t get the gold medal for her, but at least we understood why the competition went wrong. Next time, before such a competition, the organisers can be shown what kind of mistake they are making by using it
says Balázs Sziklai about the potential use of the research.
Digging deep into the gas pipelines
Balázs is very interested in how computations in game theory can be used in different fields, so the topics he researches are very varied. One of his most memorable studies, for example, was on energy economics.
Nord Stream 2 is a natural gas pipeline linking Russia to Germany, which cost EUR 11 billion. It was built in vain: it was not put into operation because of the economic sanctions imposed on Russia for its offensive against Ukraine. The project would have connected Europe’s largest supplier of natural gas with its largest consumer. And this would have had an impact not only regionally and in the European Union, but also geopolitically.
A It was very difficult to navigate between the heated political battles and the endless arguments for and against, so the Hungarian Energy and Public Utility Regulatory Authority asked the Game Theory Research Group of the Institute of Economics to investigate the impact of the project on Hungary’s gas supply.
Balázs with fellow authors, László Á. Kóczy and Dávid Csercsik interpreted this situation through a game-theoretical lens, and accordingly, they investigated the changes in the bargaining power of the individual agents by supplementing linear programming with cooperative game-theoretical methodology.
In the course of the research, a model of the European gas supply network was set up, where the gas supplying countries (e.g. Russia, Norway, Algeria, etc.) were treated as entry points and the other countries as receiving points. The transmission capacity of pipelines and the estimated sales price of natural gas were also included in the model. They looked at what happens when another pipeline is added to the network: the Nord Stream 2. It was from this network theory and operations research model that the computation was derived, which was the input to the game theory methodology.
For the countries in the network, the bargaining power of each country was calculated using the Shapley value, often used in game theory
According to the results of their model, Eastern European countries such as Ukraine, Hungary and Slovakia would be inconvenienced by the pipeline for two reasons. They would lose significant transit revenues and improve Russia’s bargaining power, which would lead to higher gas prices in the region.
Learning never ends
Because of the topicality of the subject and the complexity of the processes involved, their study on Nord Stream 2 has become a highly cited article. Even prouder than the academic success of the article, Balázs is proud that the predictions of the research have been confirmed time and again by real life:
My co-authors and I often joke that if we had as many hundreds as our article was right, none of us would have financial problems.
According to Balázs, if there is one positive thing to be said about the research career, it is that it is a learning process, as events in the world provide academics with new topics to explore. Another important lesson is why it pays to search a long time (even on an El Camino) for your vocation:
If you do something for forty years that you don’t like or don’t like, you get bored with it at best. It’s worth investing time and energy in getting to know yourself, because it’s okay to love what you do for a third of your time on Earth.
Author: László Tucsni, Communication of Corvinus