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Prisoner’s Dilemma in Business Recruitment

Having recently gone through the recruitment cycle for competitive summer internships, one thing I noticed was how early the timeline was. While it seemed counter-intuitive (many of the applications opened before I was even halfway through my current internship), I understood why companies all began earlier once one of them did. Curious to find out how just how recruitment divisions at these companies based their decisions, I decided to do some research.

One article I found about MBA candidates wasn’t an exact match to my situation but managed to explain it through the lens of Game Theory and the prisoners dilemma quite well.

In an article for the Harbus, the online publication run by Harvard Business School students, Sumit Malik, the deputy Editor in Chief talks about the accelerated process of the recruitment cycle for first year MBA students. He first highlights some challenges for both parties that arise when the timeline for recruitment begins so early. On the student side, they are often still in the exploration phase of finding a career. On the company side, they often have little to no data points off which to base a student’s demonstrated interest, academic interests, and extracurricular pursuits and see what makes them a good candidate.

This raises the question: “If firms are keen to attract talent for the long run, why recruit students who have yet to demonstrate aptitude for the curriculum or develop conviction on their career preferences?”

To answer, Malik finds that the pattern and actions are consistent with behavior studied in the well-known Prisoner’s Dilemma where conclusively, rational parties may make irrational decisions by ignoring the best outcome of cooperation largely due to a lack of communication and a lack of trust.

In this analogous situation, company A and company B are the two “players.” Recruiting early is the “confess” option and recruiting late is the “stay silent” option. If both companies recruit early, then they both compete for candidates that are less informed and vetted. If one recruits late and one recruits early, then the one that recruits early gets their pick of the top candidates while the one that recruits late can only choose among those leftover. If both companies recruit late, then both companies are competing for a top-notch pool of applicants that are well-informed, and well vetted. In Malik’s conclusion, he finds that due to the individual incentives for firms to race for talent, from the perspective of the recruiter, if other companies recruit early, “I” should do the same before prospective candidates find offers elsewhere leaving a less competitive applicant pool.

In my undergraduate situation, students have also just begun exploring interests in different careers and even majors, more so that MBA candidates and still the recruitment process has been significantly pushed up beginning as early as freshmen spring. With only one semester of academic performance and extracurricular involvement to base a candidates aptitude on, as well as no completed work experience, it stands to reason that firms should in the long run, reevaluate the way they are playing the prisoner’s dilemma game.

Source: The Game Theory of Recruiting 

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