Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
  • How do you encourage speedier adoption of your product or service?
  • How do you increase the value your product or service creates for your customers?
  • How do you extract more of the value created by your product or service for yourself?


The Employee Defection Game


A Company is developing a critical product, but it is afraid some of its Key Employees might leave and work for the Competition. The Competition has been trying to lure away Key Employees with offers of raises and bonuses. If Employees leave, however, it will derail the new product, which would be costly to the Company. The Company has decided upon several options to incentivize Key Employees to stay. The Company doesn't know which of the options would be most cost-effective in convincing them to stay.

empl defect2

For a full write-up of the situation, see An Example of Game Theory in Risk Management



The Sexual Harassment Game

One employee (the Accuser) files a claim of sexual harassment by another employee (the Accused) with Firm Management. Faced with an accusation of sexual harassment, Firm Management believes that:

  • The Accused is guilty of sexual harassment with some probability α.
  • The Accused is not guilty of sexual harassment with some probability β; the Accuser simply misinterpreted the actions of the Accused.
  • The Accused is actually a victim of sexual misbehavior on the part of the Accuser with some probability (1 - α - β). For example, the Accused regretted the affair after-the-fact or the Accused used sex to get a part or a raise.

Further information:

  • The Accused is a high-value employee of the Company.
  • A reputation for condoning harassment could cost the Company
    • Increases in employee turnover,
    • Losses in investment,
    • Losses in revenues, and/or
    • Losses in future potential hires. 

What should the company do?

4 sh game

The answer is, of course, it depends

For a full write-up of the situation, see Playing the Sexual Harassment & Misbehavior Game