Help me use game theory to better understand my workplace

January 30, 2008 4:12 AM

Help me use game theory to better understand the seemingly irrational behavior at my workplace

I have a fascination with trying to understand the behaviors of my co-workers in the context of game theory. I love the workplace - it's a wonderful zoo of seemingly odd, irrational, and puzzling human behavior. I have my own anecdotal theories about why things play out as they do, but I'm looking for more solid scientific evidence and theories. Basically I want to understand the rationality behind my co-workers' seemingly irrational behavior.

For example, one curiosity I have had lately is for those co-workers who voluntarily dilute their salaries by working long hours. Interestingly, they often seem to be the same people who nit pick about their starting salaries down to the hundredth dollar. I remember reading long ago about a game theory called something like "jackpot theory". Supposedly a reason workers work long hours is in anticipation of obtaining their bosses' salaries. However, often, like the casino games, the odds are largely against them.

What are some sites or books I can use to better understand workplace game theory? Who are the major research bodies for this area of research? What are some of the more interesting game theories that have emerged recently? How does one use this information to "game" the system?

BTW I have a science and math background, so I'm not afraid to read research papers, if necessary.

posted by brandnew to work & money (16 comments total)

Its certainly not technical, but Freakonomics has a chapter regarding drug dealers that mirrors your description perfectly (what field did you say you were in again?!?). Since you have the math background, there are two books that are pretty standard fare: Osborne and Rubenstein and Myerson. Both will give you a highly mathematical treatment of game theory and give you the foundation to hit the journals for more cutting-edge stuff.
posted by jtfowl0 at 5:54 AM on January 30, 2008

(They may also like their work, or just have a strong work ethic. Or maybe they are seeing it from the other end, and don't want to be the first on the chopping block if cuts are required.)
posted by onlyconnect at 6:01 AM on January 30, 2008

They're not diluting their salary by working long hours. They're reducing their effective per-hour pay, but that's a different thing then their total salary. It's not inconsistent to care about one's salary while not caring at all about one's effective per-hour pay. Unusual, yes. Inconsistent, no. If you want to understand it from a game-theory perspective, it may be as simple as their utility function being different than yours. Just because you value a high per-hour pay, independently of one's total salary, does not mean everyone does.

I sometimes think about human activity in terms of game theory as well, and many actions which may seem irrational at first glance are not actually so as long as one keeps in mind that a) utility is not necessarily a linear function of wealth, and b) different people have different utility functions.
posted by DevilsAdvocate at 6:26 AM on January 30, 2008

Sorry, didn't read carefully enough. You're looking for resources, not for an explanation of your particular example. Feel free to ignore my previous comment.
posted by DevilsAdvocate at 6:30 AM on January 30, 2008

This isn't a link, but a sort of caveat. Economics, and Game Theory as well, assumes "rational players" or markets of "rational consumers". This is an admitted failure of Economics, as the irrationality of real-life people is hard to measure accurately.

Your example is similar to lottery players. The expected value of playing the lottery is negative, and over a period of time, and over many players, the only winner is the organization running that lottery. However, the perceived marginal utility of that dollar (hour of work) is less than the perceived chance of winning times the utility of the jackpot.

Alternately, they value that extra hour of their weekday very lowly, as they don't have much to do with it aside from watching a crappy sitcom on TV.

People are also very bad at self-analysis. For any given skill or trait, it seems that more than 50% of people will rate themselves "Above average," a statistical impossibility.
posted by explosion at 6:39 AM on January 30, 2008

You're only diluting your salary if you have an hourly-wage mindset. To give you an example, my mother was, for her entire working career, an hourly-wage earner (government & unionized). I, on the other hand, have spent most of my career earning an annual salary. I had a particularly frustrating experience talking to my mother about why I don't punch a clock, and why it's not really necessary. That conversation went something like this:

Mom: you don't punch a clock?
Deadmessenger: Nope. Don't need to.
Mom: Then how do they know how much to pay you?
D: I don't get paid by the hour. I get paid by the year.
M: So you only get paid once a year? If you don't punch a clock, how do they know how much to make that check out for?
D: No, I get 24 checks throughout the year, all for the same exact amount. And the number of hours I work doesn't matter - I get the same check whether I work 40 hours or 60 hours a week.
M: But when you work 60 hours, how do they know how much in overtime to pay you?
D: .....

And that's the difference between an hourly-wage mindset and an annual-salary mindset.

To put it another way: people with an hourly-wage mindset view their work output as a function of time spent on the job, people with an annual-salary mindset view their work output as a function of productivity.
posted by deadmessenger at 8:03 AM on January 30, 2008 [1 favorite has favorites]

While not specifically related to Game Theory, you might be interested in The Ape in the Corner Office.

I believe that there are "rational" (as in, thought out and could make sense given limited availability of facts) explanations for people "showing face" and putting in long hours... incorrect, but rational...
posted by twiggy at 9:20 AM on January 30, 2008

I'm calling dibs on deadmessenger's two additional paychecks that he doesn't know about.
posted by wabashbdw at 9:20 AM on January 30, 2008

I'm calling dibs on deadmessenger's two additional paychecks that he doesn't know about.

Then I'm calling dibs on yours, because sometimes people get paid only on, say, the 1st and 15th of the month (or the 5th and the 20th, or whatever), regardless of the "extra days" that come in some months.
posted by Cool Papa Bell at 9:46 AM on January 30, 2008

I don't think that game theory is what you're looking for, but rather psychology of a more elementary nature.
posted by RikiTikiTavi at 10:03 AM on January 30, 2008

I'm calling dibs on deadmessenger's two additional paychecks that he doesn't know about.

12 months per year * 2 paychecks per month = 24 paychecks. You want the 25th and 26th, you can have 'em.
posted by deadmessenger at 10:36 AM on January 30, 2008

Semi-monthly (twice a month) employees would get 24 paychecks a year. Bi-weekly (every two weeks) employees would get 26 paychecks a year.
posted by odi.et.amo at 10:42 AM on January 30, 2008

From the point of view that natural history is the basis and an essential component of any science having to do with living things, I recommend Michael Korda's Power.

If Machiavelli had been concerned with corporate politics rather than statecraft, he might have written Power instead of the The Prince.
posted by jamjam at 10:49 AM on January 30, 2008

What you are looking for is covered quite thoroughly by Tim Harford in his new book The Logic of Life. He refers to it as Tournament behavior, an off shoot of game theory.
posted by ptm at 2:21 PM on January 30, 2008

Michael Schwarz has done some interesting work on this type of thing. In the "Investment Tournament" paper he discusses reasons why people beginning their careers will often work really long hours.
posted by milkrate at 3:58 PM on January 30, 2008

Supposedly a reason workers work long hours is in anticipation of obtaining their bosses' salaries. However, often, like the casino games, the odds are largely against them.

do normal people really have that much motivation to the 'long game'?

I would suggest if they're the type of people who nitpick their salaries, they're also the type of people who want to do the best job they can, even if it means working longer than they have to. Their gratification is knowledge of a job well done.
posted by browolf at 8:07 AM on February 16, 2008