The game-theoretical concept of a “Prisoner’s Dilemma” applies to situations where no overt defection has occurred. Many readers may be perplexed by this assertion since, by definition, Prisoner’s Dilemmas entail “players” selecting uncooperative strategies. However, there are scenarios where the selection of a specific approach could lead to non-optimal outcomes. But such a strategy would not be considered a direct form of defection. These strategies are analogous to a defecting because the participating economic agents are moving away from a given focal point; rather than converging upon it. Even though the participants are not directly undercutting each other but inadvertently select noncooperative strategies. One salient example of this is any situation in which both parties choose to lie to the other. Both agents believe it is in their self-interest to obscure the truth, but doing so will only engender more problems.
A novel application of this theory would be in job interviews. Why? The hiring manager and the applicant concurrently have incentives to distort the facts. The prospective employee stands to benefit from embellishing their credentials. Likewise, the hiring manager might think it is shrewd to exaggerate or overemphasize the company culture when it is difficult to find a qualified candidate. When used in unison, the consequences are disastrous. The new employee will not be unqualified for the position and will also have unrealistic expectations for the job role. Ultimately, creating more issues for the hiring manager and the jobseeker. Telling a lie may not be a direct form of uncooperative behavior, can often yield similar results.
Everyone is familiar with the concept of soft power in office politics. An individual lacking any formal authority but has the ear of management. The author of this brief essay has found himself in this peculiar situation. While I may have a relatively meager position at our company, my manager still seriously regards my input. If I have a concern, he is quick to find a remedy. The evidence of my implicit influence became evident when my boss was looking to fill a supervisor spot for our team. After a candid off-hand conversation, I expressed my preferred co-worker for the position. Then was subsequently told, “I like your logic”. Fast forward two weeks later, my preferred candidate was announced to be the new supervisor.
It is possible I misconstrued the events that transpired in the supervisor selection process. My perception of having any influence over my manager’s decision could merely be a delusional illusion. Irrespective of my impact on this decision, this was a clear Bootlegger and Baptist (1983) dynamic. At this point, it should be evident who the Bootlegger and who the Baptist is. My manager possessing the moral advocacy for the favorable candidate for the supervisor makes the Baptist. He seeks to hire an individual with the best potential for success within the position, the most qualified person. I hate to admit it; I was more motivated by self-interest. I am the salient Bootlegger in this coalition. I based my advocacy on wanting a supervisor that would not micromanage me. I had little concern for the candidate’s qualifications.
At the center of every social interaction is some variant of exchange. Whether it be friends trading pleasantries or vendors and clients exchanging money for goods; every social interaction is an exchange. For this very reason, it is perplexing how once money enters the picture the interaction has been ethically tainted. Surely, examples of bribery have many moral considerations to address. However, the disdain expressed for people who monetize a hobby is devoid of any justifiable logic. In a sense, even the exchange of nonmonetary goods such as ideas and goodwill can be abstractly viewed as a form of commerce. Much like bartering goods and services, the trading of ideas tends to make people better off. Why should the exchange of ideas enjoy the moral high ground while trading tangible goods for money is treated with ethical inferiority? Odds are that will be a question for another day.
It should be noted that nonmonetary interpersonal exchange extends well beyond interchanging nontangible ideas. It can also apply to displays of affection. One form of interpersonal exchange that seems to be most salient in the minds of people would be sexual intercourse. Outside of the deeply ingrained biological proclivity to crave sexual contact, such acts have been mystified by being shrouded in a mystique of societal taboo. Only serving to make anything about sex more alluring; sex being nothing more than “..forbidden fruit..”. Especially when it is outside of the contexts in which is societal prescribed is being permissible. Irrespective of the context in which sexual intercourse takes place, if it is consensual, it is a form of exchange.
Even in instances where sexual relations are consensual, such interactions among co-workers operate in a moral grey area. Most Human Resource departments frown upon such conduct, but rather ever outright condemn it or impose disciplinary action. However, once the exchange is between various tiers of management and their subordinates any appeal to the morality of such an interaction becomes more dubious. Not fixate on equalitarian concerns, but there is an institutional asymmetry of power. An individual’s boss has quite a bit of authority over them. After all, having the power to sever someone from their ability to earn an income is a lot of power to wield. An individual’s boss can also influence the trajectory of one’s career. Introducing sex into the mix spells a recipe for calamity.
An hourly employee having a sexual relationship with their boss is a prime example of a prisoner’s dilemma. Ideally, both parties or either individual would decline to engage in any sexual conduct. As we all know the world, we live in is far from ideal. Even if it were to happen, to not allow the incident to influence any aspect of their professional lives. Again, humans are emotional creatures. When David Hume described the servile relationship between people and their passions, he was correct. Unfortunately, such an incident cannot remain neutral, almost always bleeds into other the work life. Regardless of whether the exchange occurs on or off company property.
It would be in the best interest of both individuals to move on from their regrettable tryst (or chronic series of amorous activities). That would defy human nature, even if it would be the rational course of action. There is the ill-fated inclination of people to weaponize such situations for their interests. Falling into the categorical definition of a Prisoner’s Dilemma. The manager could threaten to demote their subordinate or even fire them if they tell anyone about their affair. The same penalties could also be applied if the subordinate decides that they are no longer interested in continuing the sexual relationship. Reciprocally the subordinate could also fight fire with fire. Deciding to use the sexual encounter as a point of leverage for either reprisal or career advancement. Opting to seize this opportunity and continue this unethical relationship with their boss. Even in some cases using past encounters as the focal point of an extortion or blackmail attempt. Either individual using their past rendezvouses in a manner that will harm the other is an unquestionable noncooperative strategy. The key factors of lacking trust and the institutional/moral disapproval of such engagements are conducive to defection. If you can’t rely on the other to be cooperative and work in everyone’s mutual interest, you might as well save yourself.
The social dynamics of the workplace often provide ample examples of applied Game theory. Whether or not individual co-workers are deliberately implementing strategies based upon research in the field is questionable. For people who possess opportunistic proclivities, it seems as if they have an implicit understanding of game theoretical strategies without being familiar with the formal concepts. Most of the ambitious employees posed to ascend the corporate ladder are always making calculations. Like the political process the aspiring network and form alliances. They tactfully engage in subterfuge to place another contender vying for that prized promotion at a disadvantage. Sometimes the professional “gamer” will even leave a subtle calling card. I once encountered a manager who inserted a quote from the Art of War into his signature. Feeling particularly brazen I decided to ask him if he has ever read the book. He did. It came highly recommended and was told that he likes to apply it to business. I quickly distanced myself from this gentleman. I prefer to avoid Machiavellians.
The unfortunate reality of maintaining gainful employment is that it is a game. Even to remain employed never mind advance within the company, you will need to adhere to the rules of the game. You must adapt to the social norms of your employer. Each decision we make at work can constitute a strategy. Co-workers are merely our fellow players. The results whether it be obtaining a promotion, getting Jim fired, or flying under the radar would function as a payoff. Completely comprising the core variables of a game-theoretical definition of a game. Once we consider the incentives structure of the workplace it becomes quite clear that from an individual’s perspective it is frequently a noncooperative game. Yes, we do need to cooperate to get the process improvement project done. However, there can be various terriers of games simultaneously occurring at one time. It is important to remember only one person can fill that manager spot! The work-related “game” may be cooperative and productive while the interpersonal exchanges could be hostile.
Since there is a high potential for the implementation of noncooperative strategies, there is also a high probability for Prisoner’s Dilemmas. An individual being consumed by their agenda can make them blind to the fact that cooperation could be more effective than working against one another. Hostile strategies tend to waste resources and time. This example of misallocating resources is in of itself suboptimal. An individual’s effort and time could be re-direct completing a concrete goal. Rather than delving into the darkest depths of psychological warfare or other manifestations of non-cooperative strategies. The typical office environment is an environment rich with examples of Prisoner’s Dilemmas.
A prevalent example of a common Prisoner’s Dilemma that occurs in the work environment is job role training. It is evident that if you properly train a new co-worker that it is all around beneficial for everyone. It would even be fair to categorize properly training new employees as a positive-sum strategy. It creates less work for the trainee down the road to have an efficient and competent co-worker. It provides the trainee with a strong procedural foundation and will alleviate their frustration later. However, both “players” are prone to acting in a shortsighted manner. The trainer frustrated having the task of training the new person to their workload may do a cursory job explaining the intricacies of various processes. There may even be a deeper-rooted rationale behind the trainer’s apathetic approach, latent hostility. The trainer may perceive the new guy as a potential threat. Either due to him exposing tactics utilized to mask a light workload or even his natural aptitude. The idea of the new employee excelling and surpassing the trainer could be a possible concern. There is also the situation of the trainer having to train their replacement in the event of layoffs (yes, it happens). The reasoning for hostility in this scenario is self-evident.
Once the trainee is faced with the less than welcoming disposition of their trainer, odds are they will also adopt a noncooperative strategy. Even going so far as to retaliate against their trainer by reporting the aggressive behavior to their manager or H.R. department. The trainee has little incentive to work with the trainer as they have already committed to being uncooperative for arguably petty reasons. Only serving to create a quid pro quo series of personal or institutional retaliations. The trainer could start a rumor about the trainee, in an attempt to damage their reputation. The trainee could continue to escalate the involvement of various tiers of management and H.R. personnel. Regardless of which methods of retaliations are deployed by either party, no one is truly better off. Time and effort have been squandered through the course of the petty bickering. The new employee still is lacking adequate training. The trainer being too shortsighted to see that properly training their new co-worker would effectively lighten their workload downstream.
The premise behind Gresham’s Law is that money of a higher intrinsic value will be hoarded while the money of a lower substantive value but legally recognized as having the same nominal value will be circulated throughout the economy. Succinctly put, “..bad money drives out good money…” pithily sums up this economic phenomenon. However, is this occurrence solely confined to the commodity of money? Doesn’t the observations convey in Gresham’s Law applicable to other goods? For example, unless a baseball card collect is presented with an astronomically large monetary offer, odds are they will be unwilling to part with a limited-run rookie card of a legendary major league player. This scenario reflects many of the assumptions regarding commodity value implicit in Gresham’s Law. Generally, rare collectibles are held on to, while mass-produced memorabilia is readily available at the local garage sale or swap meet. Most collectors will hang on to the items that are considered valuable unless another interested party can provide a commodity in exchange that exceeds the perceived value of the collectible held by the hobbyist in possession of the coveted item.
However, how does Gresham’s Law interact with the intangible commodity of human capital? A firm or a business unit within a firm would want to retain top-level talent and let go of the mediocre/poor performers. Before we can delve into this analysis we must distinguish what human capital is. Human capital is the economic value that the employee brings to the firm. Typically through their experience, education, certifications, knowledge of company procedures and policies, position-specific “tribal knowledge”, critical thinking skills, and other pertinent soft skills. For readers who have never worked in a corporate environment before tribal knowledge is the informal and unwritten knowledge of best practices of how to perform within a specific job role. It stands to reason that a potential employee possessing all of these attributes would be a hot commodity on the job market. If currently employed by a company would be an employee of a high value.
If human capital is valued in a similar sense to other commodities such as money, how do businesses act in a manner to retain this high-quality talent? The answer most human resources representatives would give is that their organization creates an environment that fosters career advancement. Stressing the perks such as tuition reimbursement, possession of company stock options, and opportunities for placement in vertical job positions. While these factors may play a role in some employees choosing to work long-term for the same company, there is another variable that HR will not be forthright about. That is oftentimes exceptional employees with a high degree of human capital end up getting pigeonholed to the same role. Oftentimes these individuals are blocked from transferring to other business units or positions within the company by the request of middle and executive management. The reason behind limiting this MVP’s potential is quite pragmatic, the business unit cannot afford to lose this individual. Their skills and knowledge are essential to the day-to-day operations of the business. It would be nearly impossible to fill the void if they were to get promoted or transition to a lateral position within the firm. In the corporate world, this individual may be referred to as a subject matter expertor colloquially known as a SME.
It should be noted that the desperate attempts of management to relegate this individual to the same job role has the propensity to backfire. Why? Because this individual gets fed up with their limited job prospects and ends seeking career advancement at another firm. In a free market for employment, a high-quality employee has many prospective options when it comes to their career. If a firm stubbornly, confines them to a shallow career path they will simply look for employment at another company.