Labor and Management as a Non-Zero-Sum Game

 

Labor and Management as a Non-Zero-Sum Game

 

                              Worker:

 

               |   Work hard      |   Work soft        |

               |------------------|--------------------|

      Pay well |   Prosperity     |   Worker’s victory |

Boss:          |------------------|--------------------|

      Pay ill  |   Boss’s victory |   Depression       |

               |------------------|--------------------|

 

          Let P = Prosperity, W = Worker’s victory, B = Boss’s victory, and D = Depression. If both parties tend to tactically profit by not contributing, then a dilemma arises:

          W says: B < D < P < W

          B says: W < D < P < B         -    a dilemma matrix

 

If both parties tend to tactically profit by not contributing if and only if the other party contributes, then a ‘chicken’ game arises:

          W says: D < B < P < W

          B says: D < W < P < B         -    a chicken matrix

 

          Both games assume:

1)   That a well-paid worker is tempted to laze

2)   That a well-served boss is tempted to stinge

In dilemma:

3)   Ill-paid workers can laze, and they prefer the free time

4)   Ill-served bosses can stinge, and they prefer the money

In chicken:

5)   Ill-paid workers must work hard to survive

6)   Ill-served bosses must overpay to survive

 

In both games, P is optimal for both players, given repeated play, but it is tactically unstable.

In dilemma, P tends to decay to D due to mutual suspicion, unless reciprocity is mutually acknowledged.

In chicken, P tends to decay to W or B due to intimidation, unless reciprocity is mutually acknowledged.

In both games, temporary relations tend to undermine P. Prosperity requires reciprocity within an enduring relationship.