If you work for an organization that places a lot of emphasis on 360 peer reviews, you’re most likely experienced in this practical execution of game theory. While 360s (as they’re called) are important for establishing egalitarian institutions with fair employee evaluation practices, rating employees on subjective and objective criterion, 360s are inherently flawed. My recent observations on organizational psychology and management have led me to believe that there is an inherent incentive to use 360s for an individual’s career advancement at the expense of all their colleagues.
You may recall the prisoner’s dilemma from a business school class, or conversation with a slightly nerdy dude like myself:
Imagine a situation where there are 2 prisoners, each guilty of a crime. They’re in separate cells, where guardsmen interrogate them. You can imagine the string of outcomes:
- Betrayal: Prisoner A rats on Prisoner B, Prisoner B remains silent: Prisoner B gets the maximum sentence (10 years) and Prisoner A is free
- Betrayal: Prisoner B rats on Prisoner A, Prisioner A remains silent: Prisoner A gets the maximum sentence (10 years) and Prisoner B is free
- Betrayal: Prisoners A and B rat each other out: Both prisoners go to jail (5 years)
- Coopreration: Prisoners A and B consipre to remain silent: Both prisoners get out with a slap on the wrist (6 months)
If subjects are focused only on their personal outcome, they’ll betray (scenario 3). This is called a Nash Equilibruim, where no participant can gain by changing strategy. I.e., you go to jail for 5 years in the worst scenario, or you go free. This is the dominant outcome when simulated.
Though feedback loops are great mechanisms for professional growth, there’s a very strong incentive to betray if the betrayal can lead to career advancement. (I.e. I’m smarter than you all and I’ll make sure everyone knows it in your review). And since feedback is anonymous, which is the best practice, it is hard for any subject to pin negative feedback on someone else.
There you have it. Game theory everyone can (unfortunately) relate to.