CORPORATE PRISONER’S DILEMMA

This is a satire on boss-subordinate relationship in a corporate setting. So, one is expected

to not take it seriously (mathematical soundness of the arguments is also open to the
debate). I think the setup can be modeled as a strategic game (games people play  ). I
will analyze the strategic game and argue the solution in each scenario . The whole
setup also lends itself nicely to a discrete Markov Chain; I will come to it later, as I feel, I
may loose the satire in too much of mathematical detail.

So, back to the corporate world. For an individual in a corporate setting it boils to a two
player game he is playing with the boss or his/her subordinate. I am assuming both
players, the Boss and the Subordinate are rational to the core, i.e., any action they choose
is at-least as good, according to their preferences, as every other available action. Each
one can choose a strategy in the game that profits him the most. Available actions to each
player are 1.) Dominate the other 2.) Maintain the status quo. Action Dominate other
needs some explanation: when boss is in dominating position; it means he is smart and
can be serious trouble for subordinate’s butt. When subordinate is in dominating position
it means he has got his/her boss’s balls nicely covered. We can see that there are four
possible scenarios. We will take each scenario individually and discuss the game.
Some Notations:
Available Actions for the both players are {Dom, MSQ}, where Dom means action
dominate, and MSQ means action maintain status quo.
S = strong
W= week
Definition of Nash Equilibrium(WIKI): If each player has chosen a strategy and no
player can benefit by changing his or her strategy while the other players keep theirs
unchanged, then the current set of strategy choices and the corresponding payoffs
constitute a Nash equilibrium. In other words, to be a Nash equilibrium, each player must
answer negatively to the question: "Knowing the strategies of the other players, and
treating the strategies of the other players as set in stone, can I benefit by changing my
strategy?"

1.) Scenario; (S, W), Boss is Strong and Subordinate is Week

SUBORDINATE
Dom. MSQ

Dom. (2,-2) (4,1)

BOSS

MSQ (1,-1) (3,0)

ANALYSIS: Interpreting the payoffs: Payoff (2,-2) in the first cell denotes that, for
the action profile [both boss and subordinate choose the action dominate], pay off of
the boss is 2 and pay off of the subordinate is -2.
It is clear from the payoffs in above figure that for the subordinate action Dom. is
dominated by the action MSQ, i.e., it is always profitable for him to choose MSQ
over Dom. Given subordinate’s preference Dom is the best strategy for the Boss. So,
action profile (Dom, MSQ) is the solution action profile and also a NASH
EQUILIBRIUM, i.e., boss chooses Dom, and Subordinate chooses MSQ in this
game. In this scenario, if you are the subordinate you are totally screwed. [IF
Subordinate can relate to it !! he is poor shod!!]

2.) Scenario; (S, S), Boss and Subordinate both are Strong

SUBORDINATE

Dom. MSQ

Dom. (0,0) (2,1)

BOSS

MSQ (1, 1) (2.5,2.5)

ANALYSIS: This is the case where both players agree to disagree. Both players
respect each others professional competence and know the strategy to dominate will
back fire. So, they decide on you scratch my back and I yours. Best scenario for the
corporate. Nash Equilibrium is (MSQ, MSQ). [IF Subordinate can relate to it !! he is
lucky dog!!]
3.) Scenario; (W, S), Boss is Week and Subordinate is Strong

SUBORDINATE
Dom. MSQ

Dom. (1,2) (2,1)

BOSS

MSQ (1.5, 3) (1,1)

ANALYSIS: Subordinate knows he has got the boss by balls. The best scenario for
the subordinate. This scenario will make the Boss spiritual. Subordinate will have
time of his life. Nash Equilibrium exists; though no guarantee how long it will last.
Nash Equilibrium is (MSQ, Dom.). [IF Subordinate can relate to it !! he is son of a
gun!!]

4.) Scenario; (W, W), Boss and Subordinate both are Week
THIS SCENARIO IS NOT WORTH THE EFFORT.

NEXT POST WILL RELATE IT TO MARKOV CHAIN!!!