Prisoner’s Dilemmas- Part II: Workplace Training


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.

Thier’s Law Applied to Human Capital

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This blog entry was inspired by feedback from Enrique at the Prior Probability blog.

If Gresham’s Law applies to retain human capital in the job market, is it possible that Thier’s law (p.9) could also be applicable in certain contexts? On money, when legal tender laws forcing vendors to accept both forms of money at nominal value, economic agents will choose to transact with the higher valued currency. Presenting an axiom that is the opposite of Gresham’s Law, “ Good money drives out bad money”. Typically in the arena of monetary economics, the divide between advocates of Gresham’s Law and Thier’s Law is a sharply delineated dichotomy. Most proponents of one will not defend the possibility that the principle could apply to the circulation of money.

However, in terms of the circulation of human capital these concepts are not necessarily opposed. Employee retention is the byproduct of several highly qualitative attributes that are generally specific to a certain firm. In corporate vernacular, the term “culture” is thrown around so frequently that it has become a buzzword deeply embedded in the American psyche. Companies such as Google, go to great lengths to demonstrate that they have a flexible, open, and innovative corporate culture. The veracity of the claims is ultimately judged by the perceptions of the individual employees. One employee may adore working at Google, while their colleague completely despises the company’s ethos. Making the ebbs-and-flows of human capital even more complex. Employee retention at the individual level is based upon a multitude of various factors. The aggregated collection of the opinions of all the individual employees regarding their work-life satisfaction tends to paint a fuller picture. If while perusing Glassdoor, you happen to see a company with eighty-five two-star ratings, chances are this is not the petty slander of a few disgruntled employees. This is why oftentimes companies will periodically send out surveys to their employees in an attempt to measure overall morale throughout their organization.

Putting aside the highly individualized variable of career satisfaction metrics for an entire firm, if there is a pattern of talented employees leaving, there is a retention problem. Sometimes this may be isolated to a specific department even if the firm as a whole has no issues keeping competent and productive workers. Certain companies and even job roles select for specific attributes that may not be conducive to attracting skilled and reliable labor. Some industries are notorious for high turnover rates, one salient example being the hospitality industry. I remember a few years back, being in between jobs, so I briefly worked at a call-center. For me, this was an income stream until I found something else, for many of the people in my training class it was a lifelong career path. This path was a volatile one. Staying only a few months at one company and then abruptly quitting, generally with no notice. Upon receiving a new job offer, I gave my supervisor my two-week notice and he was astonished by the fact I even bothered to take this step. After only six months, only five people (including myself) out of the twenty-five in my training class remained. Industries and job roles with high turnover may be more willing to retain employees with fewer skills or with a poor performance history, due to the outflow of higher-skilled employees. Perfectly mirror the effect described in Thier’s lawinstead of money, the commodity that is flowing out of the firms is quality human capital.

The question becomes how can these opposed ideas transpire concurrently in the same labor market or even the same company. The answer to this question is predicated upon a “rules of the game” type logic. Each company and each interior department within a firm operate as governing bodies directing the task of workers. Meaning both varying capacity function as “ruler-makers” within the company. Think of corporate policy as being analogous to the federal government, while the department formulated rules are similar to state law. Clearly, in most cases, corporate policy supersedes department policies. If these rules are too onerous or unjust there is little a qualified and skilled employee could other than leave. Either accept and abide by the rules set forth or resign. Resignation being a clear withdrawal of consent on the part of the employee. One relevant example of this is companies still drug testing for marijuana in states where it is legal. Granted, it is an organization’s prerogative to make employees refraining from drug use a contingency of employment. However, if enough high-caliber job candidates take to smoking cannabis they may be in a bit of a quandary. A few years back the FBI ran into this problem due to their “drug-free” employment policy.

If the rules governing the management of a firm are too oppressive, people with options are going to find another job opportunity. What the company is left with are those who lack the skills, ambition, and conscientiousness required for productivity. The employer is left with the staff that clings to their jobs for dear-life as odds are they do not carry too much value on the job market. Much how department policies such as catering to senior and skilled workers can impose an effect similar to Gresham’s Law the opposite is also true. If you create rules that disincentives tenure and self-development, odds are you will lose a lot of great workers. The kind of workers that can be a game-changer in managing strategic customers. As we have observed with the call-center example, frequently due to the oppressive rules, low pay, and dismal work environment people with potential tend to leave these positions. Leaving you with the unskilled and the desperate who are locked-in to the role due to their circumstances. Keeping this dynamic in mind, it is a wonder why people expect quality service whenever they call tech support.

Workplace Rent- Seeking Honorable Mention


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In my previous blog entry, I discussed the topic of rent-seeking in the office. I detailed three common forms of workplace rent-seeking. However, there are several other notable forms that I feel are worth mentioning.


Withholding Information:


This is more so applicable in the training process.  The specifics of internal procedures are often colloquially referred to in an office setting as “tribal knowledge“.  Individuals who are either paranoid or not confident in their position with the company will withhold information in the training process. They may refuse outright to properly train new hires. They may only provide a portion of the correct information. They may monopolize specific train materials. Through creating artificial information asymmetry they make themselves look more valuable and decrease their chances of being terminated. Making themselves the default team subject matter expert.


Candy Bowl: 


As the old saying goes you attract more flies with honey than vinegar. There is some validity to this statement. The candy bowl can be seen as either a trap or a peace-offering. Either way, it detracts from the true nature of the individual who maintains it. Typically, they are a very disagreeable and temperamental person. To soften their image they attempt to appear charitable by proving communal bowl filled with sweets.  If your peers like you, you can get away with a lot. More accurately if you can bribe your peers after being nasty to them you can continue to get away with a lot. If your co-workers don’t have any lingering issues with your boss will keep you around. Why? If you aren’t disturbing the group dynamics there isn’t any reason to deliver punitive actions.


Plastering Your Cubicle With Positive Quotes: 


Anyone plastering their cubicle walls with quotes from Dr. Martin Luther King Jr. or Gandhi is someone to avoid like the plague. If you make your workspace a billboard for inspiration quotes you most likely have a few skeletons in your closet. To be so extreme with advertising one’s proclivity towards positivity should be a red flag. An indicator of someone attempting to manipulate human psychology for their gain. It is meant to distract from their overt from their negative behavior. It falls into a similar behavioral category as self-promotion. The objective is to have others focus on what is most salient and not what is factually true.

Workplace Rent-Seeking



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One of the core principles of Public Choice Theory is the concept of behavioral symmetry.  Behavior symmetry can be best defined as

“… the same behavioral model of human action must apply to all decision-makers regardless of institutional setting (public or private).” (Shughart II & Wardle, 2020, P.594)

This conceptualization firmly reflected in James M. Buchanan’s proclamation of  Public Choice Theory being ” politics without romance“. Meaning whether you work in for the government or a private corporation your incentives generally don’t change. Working as a bureaucrat doesn’t dampen the allure of a high salary or generous benefits. Many people tend to view politicians and government employees as working towards the common good. Ignoring the fact that their decisions are not immune to self-interest. Demonstrating that this faulty assumption about civil servants is nothing more than a halo effect. The belief that government employees are striving towards a higher moral good than individuals employed by a corporation is illusory. People respond to incentives regardless of their occupation.


Considering the previously described application of behavioral symmetry, it wouldn’t be outlandish for a phenomenon that transpires in the public sphere to occur within a private institution. To take it a step further, to even claim that it takes place on an individual level. As in actions taken by a single person versus a solitary institution.  Could the principles of Public Choice even be applied to the individualized interactions of workers in an office environment? Certainly! After all, incentives do not change. We are merely changing the environment and the scale of transactions.


The concept of rent-seeking tends to be commonly reflected in the behavior of office workers. What is rent-seeking? It can be described as a person or organization attempting to secure wealth without creating generating any productive output. Generally, this is done so by seeking an institutional advantage. Gordon Tullock, the theorist who developed this theory, utilized the example of tariffs to demonstrate a practical application for this concept. Governments typically do not impose tariffs on their own, but rather due to lobbying pressure from interest groups. Tullock referred to this variety of behavior as “wasteful” (Tullock, 1967, P.5). As a side note, Tullock may have been the architect rent-seeking, however, it was economist Anne O. Krueger who coined its name’s sake back in 1974.


Based on my observations of working in a corporate office there are three prevalent forms of workplace rent-seeking. This list includes: self-praise/  verbal demolition of co-workers, brown-nosing, and creating busywork. Any action or omission of action in the workplace is overtly economic. No one works for free. The only difference is scale. Many of these behaviors are anti-competitive. At work, your co-workers are your competition. All of these behaviors are attempts to secure gains without creating any additional wealth. Through damaging the image of co-workers or the individual improving their image, they are gaining potential job security which protects their paycheck. Typically, at the expense of the employer because this behavior does not distract from employees doing their jobs.


Self-Praise and Verbal Demolition of Co-Workers:

As the saying goes talk is cheap. Unfortunately, empty words have carried more clout than they should out on the sales floor. Anyone can pat themselves on the back and expound upon the “superior” customer service they provide. Especially when the boss is present. Much of this bluster, whether it is factual or not, skew popular perception. It is easier to take things for face-value than to look below the surface. If someone is persistently selling their skills and value to the company, it is easier to believe them than to validate their claims. Even when faced with contrary metrics many managers still fall into the folly of accepting the shameless self-promotion of these under-performing employees. This acquiescence is generally also reflected in the perceptions of this subpar employee’s peers. Despite all of the opposing evidence they will express a favorable opinion of this individual. Making the manager less inclined to terminate this individual. The manager would not want to jeopardize group dynamics. However, baseless self-promotion does is nothing but counter-productive and a waste of company resources.


The devious foil of Self-praise is the verbal demolition of co-workers. Portraying co-workers in a bad light to distract from an individual’s performance deficits. One common example is proliferating gossip and rumors. Even to be so brazen to fabricate formal complaints regarding interactions with individuals. For example, a false sexual harassment complaint filed with human resources.  Gossip being on the lower end of the scale and fraudulent human resource reports being a more extreme form. Going to great lengths to assassinate the character of your co-workers requires a great deal of time and effort. It could be suggested that it would even be easier to just do your job. Versus wasting everyone’s time and resources with such puerile and sophomoric attempts at subterfuge.




Complimenting the boss, attending all of the social functions you are invited to, pretending to be his friend, laughing at all of his lame jokes. Brown-nosing, sucking-up… this behavior goes by many terms. No one every engages in brown-nosing without having a specific set of ends. Whether it would be the boss overlooking poor performance or giving other forms of preferential treatment. Such as being picked over more qualified candidates for a promotion. Why work harder when you could just work smarter? It is easier to go get drunk with your boss at a happy hour and pretend to be his best friend than to do your job. It is astonishing how many people in management fall for these naked attempts to curry favor with them. Then again an entire encyclopedia could be written about the psychology behind this mystifying phenomenon.


Creating Busywork:


The image of busy workers is synonymous with productivity.  Is this always the case? Not always. Sometimes workers will generate work or purposely utilize inefficient methods to complete tasks to create the perception of productivity. Some employees will go so far to create arbitrary tasks they will intentionally do their jobs incorrectly. Their pointless busywork would be correcting their own mistake. As perverse as that sounds, I have seen it with my own two eyes! Unfortunately, perception tends to carry more weight than substance.  Even if that perception is illusory.


A more traditional example of this rent-seeking tactic is to intentionally procrastinate and then do all your work at the end of the day. To create the illusion that you are busy and working hard.  Versus addressing action items as they come in throughout the day. Generating the image of having a mountain of work to do makes it look like you have a heavier workload. Making you less susceptible to being ousted out in the next round of layoffs. While counter-productive these methods aim to mask the fact that their position is nothing more than a redundancy.