13th July 2010
While the publication of Peter Mandelson’s memoirs has highlighted the strife at the centre of the Labour government over recent years, new research published by Friedel Bolle, Jonathan Tan and Daniel Zizzo has strengthened the case for Mediation in employment disputes.
The three economists, from Frankfurt, Nottingham and East Anglia respectively, have published a paper ‘Vendettas’ in which they explain the results of an experiment designed to illustrate the economic effect of unhealthy competition. The experiment put volunteers into a computerized game with unseen and unknown co-participants where each could take turns to ’steal’ a proportion of the other’s probability of winning £10. Crucially, the ‘theft’ of probability resulted in only a small increase in their own chances of winning the money; in other words, ’stealing’ in this way reduced someone else’s prospects but did not substantially increase their own. When vendettas were allowed to develop in the experiment the protagonists pursued the conflict well beyond the reasonable limits of self-interest, usually resulting in an net loss for both parties. In fact, 70% of the games showed ‘tit for tat’ stealing which resulted in both party’s chances of winning reducing below 10%, thus ending the game. This mutually assured destruction reduced to 50% of vendetta cases where the participants were given the opportunity to break from the game between rounds and answer a brief questionnaire about their state of mind.
This probably confirms some things that we already know, but its nice to have them proved. The well established economic theory of ‘tournaments’ predicts that workers will deliberately sabotage one another when incentives to outperform the average are sufficiently generous (Banker’s bonuses, anyone?) but this work goes further in its emphasis on the self-destructive nature of the subject’s responses and the apparently simple nature of a partial solution. Mediators are well aware of the lengths that individuals in dispute will go to harm their protagonists’ interests and, therefore, those of their employer. Those same Mediators are also aware that allowing individuals to ‘vent’ their feelings (as the questionnaire did in the experiment) is an important early stage of any mediated agreement between parties.
No-one seriously doubts the corrosive nature of workplace and employment disputes but its nice to have some economists validating that view.
