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Respond to the question: Game Theory and Employment Fraud?

11/09/2009 10:32 PM by Tony; Game Theory and Employment Fraud

I'm attempting to apply game theory to the idea of employment fraud in China. Specifically, it is common practice for employees to do private deals with firm clients, thereby keeping for themselves the fees that the clients pay. I'd say that by doing so, they are enriching themselves in the short term, but at the same time keeping their company less profitable. If everyone acted honestly, the company would make more money, and expand to hire more people. Therefore the people currently there would rise in responsibility, status and pay as the ranks swelled with new, more junior workers.

On the other hand, there may be confounding factors that don't make this fit neatly into a prisoner's dilemma model. Maybe the company, making more money, would just pocket it, enriching the owner? Or maybe people are worried that they might not be employed there long enough to rise in status, meaning short-term gains at the expense of the company are the most rational.

I don't know. Can employee fraud such as this be put into a game theory framework? [Manage messages]