Wednesday, September 05, 2007

Labour Strike and Game Theory

If you have lived around 25 years in Malluland, you might not bat an eyelid when you read in the morning newspaper that there is going to be yet another strike. It’s part of our culture. But over here in London, I did not expect these ‘strike’ traits to be so prominent.

Within 2 months of my arrival here there have been 2 strikes that affected almost everyone in London in someway or the other.

First was the Royal Mail strike. The snail mail service in UK came to a complete halt last month. One might think that in this e-savvy era, would we miss the snail mail for a couple of days? Looks like we do! Discontent was very visible among the public. I was affected too and had to shell out credit card late payment charges.

Then came the massive London underground tube strike. The strike is still on as I write this. It has inflicted direct pain into the lives of everyone in London. If you are use the tube, you would have lost your money spent on the season ticket for this week. No one is gonna reimburse that to you now, are they? On top of that you have to spend an extra two hours (in my case) commuting to work everyday. Even if you don’t use the tube, you are not spared. Your transport option, be it bus or car or cycle; you will be invaded with the 3 million people on the roads who would otherwise have been inside the tube.

So many strikes! What really goes beneath all that we read on the newspaper and see on TV?

Your local economist might be able to throw more light into it than the trade union who called for the strike in the first place. It’s all explained by the much celebrated Nobel Prize winning discovery in the field of Economics called Game Theory.

If you have not heard of Game theory before this might be a good time to get enlightened about it here. And read about the famous Prisoner’s Dilemma here. If not, then read on.

So what's game theory got to do with labour strikes?

In the case of a labour strike we have a non-zero-sum game. In this, the strategies that can be adopted could lead to a variety of different outcomes - you could stand to gain or lose or adopt a strategy of 'best case' or 'worse case' scenario. The union therefore could adopt an aggressive negotiating policy - if it succeeds its members could end up gaining a significant wage increase and/or an improvement in working conditions. There will be a temptation for the union to behave in this way if it thinks it is more powerful than the management.

Equally the management could behave in that way also if it feels it has the strength. Both, however, might feel that such a 'go-all-out' strategy is risky and as such they might prefer to adopt a compromise approach whereby they gain something but may have to give something in return - representing a potential 'loss'.

The game is made more complex by the fact that we have a number of examples of such behaviour in the past upon which to draw and to influence our decision making processes! If other unions have successfully confronted management then maybe the time is right for a bold approach now rather than a conciliatory one? The game goes on….

What makes this so called game so challenging is that, just like poker – which is a classic game theory scenario – your decision depends on the actions by the other party and you can only take a good guess about his strategy and pray to God that you don’t end up on the wrong side at the end of the game.

Our own Mahatma Gandhiji brilliantly played the game-theory-card to give us independence. His Salt Satyagraha or the Dhandi March is an example of game theory. And we all know who won the game at the end, though it looked otherwise just after the march!

I just wish that these people would stop playing their I-strike-Whachyugonnado game soon so that the rest us can get on with our lives.


Nikhil Narayanan said...

Never thought on these lines!
Thanks god u r back :)

silverine said...

Great post!

Girl With Big Eyes said...

Hi Nikhil,
I am back for good, as long as I have internet at lunch hour at work :)

Hey Silverine,
Long time!