Drama theory is one of the problem structuring methods in operations research. It is based on game theory and adapts the use of games to complex organisational situations, accounting for emotional responses that can provoke irrational reactions and lead the players to redefine the game. In a drama, emotions trigger rationalizations that create changes in the game, and so change follows change until either all conflicts are resolved or action becomes necessary. The game as redefined is then played.
Drama theory was devised by Professor Nigel Howard in the early 90s and, since then, has been turned to defense, political, health, industrial relations and commercial applications. Drama theory is an extension of Howard's metagame analysis work developed at the University of Pennsylvania in the late 1960s, and presented formally in his book "Paradoxes of Rationality", published by MIT Press. Metagame analysis was originally used to advise on the Strategic Arms Limitation Talks (SALT).
A drama unfolds through episodes in which characters interact. The episode is a period of preplay communication between characters who, after communicating, act as players in a game that's constructed through the dialogue between them. The action that follows the episode is the playing out of this game; it sets up the next episode. Most drama-theoretic terminology is derived from a theatrical model applied to real life interactions; thus, an episode goes through phases of scene-setting, build-up, climax and decision. This is followed by denouement, which is the action that sets up the next episode. The term 'drama theory' and the use of theatrical terminology is justified by the fact that the theory applies to stage plays and fictional plots as well as to politics, war, business, personal and community relations, psychology, history and other kinds of human interaction. It was applied to help with the structuring of Prisoner's Dilemma, a West End play by David Edgar about the problems of peace-keeping.
In the build-up phase of an episode, the characters exchange ideas and opinions in some form or another and try to advocate their preferred position – the game outcome that they are hoping to see realised. The position each character takes may be influenced by others' positions. Each character also presents a fallback or stated intention. This is the action (i.e., individual strategy) a character says it will implement if current positions and stated intentions do not change. Taken together, the stated intentions form what is called a threatened future if they contradict some character's position; if they do not – i.e., if they implement every position – they form what is called an agreement.