Speaker: Valery Pavlov
Affiliation: Information Systems and Operations Management
Title: Non-transitive games in business
Date: Tuesday, 24 Mar 2015
Time: 5:00 pm
Location: Owen Glen building, room 260-321
This paper studies a model of competition between two players who are concerned not only with their expected profits but also with their chance of earning more than the other player. As a result, the game has some similarities with the well-known Rock-Paper-Scissors game. We conduct an experiment that tests (i) the hypothesis that such competition may arise without monetary rewards, purely as a result of intrinsic competitiveness and (ii) whether such social preferences can be easily mitigated. The experimental data provide strong evidence of the intrinsic competitiveness hypothesis and indicate some possibilities for its mitigation.
We hope this study may be of interest for practicing managers. First, it broadly captures a number of common situations in which “popular” decisions clash with “good” ones. Popular decisions bring pleasing results more often than good decisions but the difference in such is not that big whereas when outcomes of good decisions result in much higher gains albeit less often. Second, the competition mechanism we analyzed may explain why employees may be reluctant to share their own decisions and when decisions of the best employees are shared with the rest the overall performance of the company may be driven away from the optimum.