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8. PRISONER'S DILEMMA
The calculations presented in preceding sections may leave the impression that the workers' loss is always the employers' gain. It ain't necessarily so. The cold, hard cost calculations could easily mask real, but much more difficult to measure, losses: lower labour productivity, reduced demand from constricted consumer purchasing, increased taxes to pay for the social costs of unemployment, etc. The net effect is to make everyone worse off and at the same time reluctant to give up the "safeguards" that are ensuring their misery.
The prisoner's dilemma is a story used in game theory to show the difficulty of rationally analyzing certain kinds of decisions. In the story, two criminals are captured near the scene of a crime and interrogated separately by the police. If neither of the criminals confesses, then both of them will be charged with a lesser offense and serve one year in prison. If both confess and implicate the other they will both go to jail for 10 years. If one confesses and the other doesn't then the one who confesses will go free and the other will go to jail for 20 years.
The strategies in the game are to confess or not confess. The payoffs are the sentences served. A rational analysis of the options by each of the prisoners will convince them both to confess and they will both go to jail for 10 years, even though the better outcome would have been for both to keep silent and go to jail for only one year.
The prisoners dilemma presents a highly simplified decision situation, but it may provide some insight into why perfectly workable solutions to unemployment seem impossible to implement. For example, proposals for worksharing unfailingly fall on the aggressively deaf ears of government and business. Even labour's traditional support for such proposals tends to contain more rhetoric than substance. It's worth reviewing some estimates of the potential payoff.
In "Working Less and Enjoying it More," Frank Reid discussed the job creation potential of voluntary work time reductions. Reid based his estimates on a survey of employee attitudes toward work reduction conducted by Statistics Canada in 1985. Reid's definition of voluntary work time reduction included only the number of hours respondents said they would like to reduce their work time and for which they were willing to give up an hour's pay.
How closely those 12 year old survey results reflect current attitudes is uncertain, but Reid's estimates were meant to highlight a possible direction, not give a precise projection. Reid estimated that voluntary work time reduction alone could reduce unemployment in Canada by 3 to 4 percent.
A further reduction in unemployment could be achieved by reducing the amount of regularly scheduled overtime worked. Typically, about two-thirds of all paid overtime is regularly scheduled. The Advisory Group on Working Time and the Distribution of Work estimated in 1994 that if one-half of the paid overtime were converted to new jobs, it could mean an additional 80,000 full time jobs, or a reduction in unemployment of another half a percent.
Both estimates contain conservative assumptions about how much of the time not worked by one group could be converted into new jobs. But together the two figures add up to a 3.5 to 4.5 percent reduction in unemployment, or 500,000 to 700,000 permanent full-time jobs. This is about the same number of jobs as have been created over the past four years through economic recovery, although the latter total includes both part-time and full-time jobs.
Of course, there is plenty of room to dispute the estimates. The impact of policies to promote work sharing could be much greater than Reid and the Advisory Committee estimate if more people are attracted to shorter work time once it becomes a possibility, instead of just an idle dream. The impact could be much less if people prove to be more willing to say they would forego income than to actually do it. But the federal government doesn't seem eager to find out one way or the other. And support for worksharing from business or labour usually comes with reservations attached that the other party is unwilling to accept.
8. "What strategies are 'rational' if both men want to minimize the time they spend in jail? Al might reason as follows: 'Two things can happen: Bob can confess or Bob can keep quiet. Suppose Bob confesses. Then I get 20 years if I don't confess, 10 years if I do, so in that case it's best to confess. On the other hand, if Bob doesn't confess, and I don't either, I get a year; but in that case, if I confess I can go free. Either way, it's best if I confess. Therefore, I'll confess.' "But Bob can, and presumably will, reason in the same way -- so that they both confess and go to prison for 10 years each. Yet, if they had acted 'irrationally,' and kept quiet, they each could have gotten off with one year each."[return to text]
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