Game Theory and Cooperativeness seen in Competitive Manufacturing Industries
https://phys.org/news/2018-09-competition-coworkers.html
A study on the manufacturing industries in the U.S. and Germany revealed that companies in more-competitive industries were more likely to exhibit behavior that was cooperative among their employee base. Employees at competitive companies were more likely to band together via sharing, cooperation and volunteering in their roles than employees at other companies. The proposed reasoning behind this trend is that employees in competitive industries are vulnerable in their positions so they need to take the risk of being codependent in order to increase company performance overall. The study was conducted by having employers play games where they are given 10 Euros and can either keep it to themselves or contribute it to an employee pool that grows by 150% before being distributed to all team members. In the first version of the game employees slowly donate less money as they do not want to risk losing more than their peers. In the second round of the game, the employee pool grows by an even higher rate if the pool holds more money than a “competitors” pool. If the employee pool holds less money than the competitor, the money is all lost. Despite the higher risk, employees donated more money in this round. This is representative of employees being more cooperative when stakes are high (in a competitive industry) instead of withdrawing and focusing on themselves. In both games the donations approached their nash equilibrium predictions.
This article connects to the topic of game theory as we discussed in class. In the game, players always act in their best interests. In initial rounds of the games, employees donate more money than they do later in the game because they slowly realize that their peers are donating less and they employ decisions that act in their best interest. In the second game, where stakes are high, employees at the competitive companies rise to the equation and employ the nash equilibrium where more of them are donating money to the pool so they can win as a team. This is an interesting point because employees would increase their money amount in either version of the game by donating (a dominant strategy and approaching nash equilibrium after multiple rounds in both games), but employees were more likely to risk their money when the stakes were high and they perceived their teammates as being equally trustworthy and vulnerable in the game. I also found it interesting that employees would not keep donating money through every round (regardless of the rate of payoff) with the realization that they could sustain the increase in money over multiple rounds through cooperation. Instead, especially in the first game with lower stakes, employees seemed to prefer not donating any money in the early rounds so they could take advantage of their peers attempting to collaborate. This is an interesting example of game theory and gives a new light to my understanding of nash equilibrium.