Tuesday, November 01, 2011
I had an interesting conversation with my friends about why people choose to cheat. In this case, the Nash equilibrium would be when both partners choose to be loyal to each other (1,1)and the pay-offs are great. But sometimes, the fear is the possibility of being fooled by the other (1,-1) (-1,1) and be let down. An extreme outcome (and prevalent social scenario)would be when both choose to betray the other (0,0) Maybe the betrayal doesn't feel so bad then.
Also, think of the relation between a corporation (A) and an employee (B). The employee chooses to be faithful to his/her firm- gives his/her best shot at work and do more than asked. The firm in return provides ample scope for growth, gives incentives for hard work and so on and so forth and the relation is a long, strong one. The employee doesn't feel he has wasted his efforts and the firm is confident of its most essential resource : its employees. But if the employee is lazy, or not giving his best- wary that it will be unacknowledged, he/she will not be loyal to work and attrition will follow (1,-1). The firm might downsize or let go of people to cut down operations costs. Even a hard-working employee will feel cheated then (-1,1). In times of economic affluence, a firm might not care what quality of work is produced, and the employee may take no care of improving performance (0,0). Both lose.