Forgiveness


Once someone has harmed you, it is often impossible to reverse the damage. If you would profit from continuing your relationship with the transgressor, however, it would be in your interest to forgive. Unfortunately, people are more likely to harm you if they expect to receive your future forgiveness.

Consider a game in which Acme regularly receives scheduled shipments from its supplier. Unfortunately, one-time difficulties make it extremely costly for the supplier to deliver the goods when promised. If the supplier believed that Acme would never use it again if its shipment was late, then the supplier would incur extra costs to deliver the goods on time. If, however, the supplier believed that Acme would forgive its tardiness, then it would not deliver the goods when promised.

Figure 6 models this game. The supplier moves first at A. If the supplier chooses to be late, then at B Acme can either keep or fire the supplier.

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Figure 6

Acme benefits at B from forgiving a late supplier. One might argue that it isn’t really in Acme’s interest to forgive since the supplier will take this generosity into account and be late at A. The supplier does not know what Acme will do, however, until after the supplier has decided whether to deliver its product on time. If the supplier chooses to be late, then Acme might as well forgive the tardiness since it will lose even more by firing the supplier. True, Acme could promise that it will fire a late supplier, but such a threat lacks credibility.

Acme could win this game by developing a reputation for being strict with suppliers. If the game in Figure 6 were played only once, then Acme would always be better off not punishing its supplier. To avoid future exploitation, however, Acme shouldn’t forgive. Acme could also win by convincing the supplier that it was a little irrational and just couldn’t stand being taken advantage of. If the supplier believed that Acme would always fire them at B just to get revenge, then it would always deliver its goods on time.




Game Theory at Work(c) How to Use Game Theory to Outthink and Outmaneuver Your Competition
Game Theory at Work(c) How to Use Game Theory to Outthink and Outmaneuver Your Competition
ISBN: N/A
EAN: N/A
Year: 2005
Pages: 260

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