Case Study

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4/8/2015 Business Ethics : Today vs. Earlier Period Society’s Expectations of Business Ethics Dilemma and Action Ethical Problem Actual Business Ethics Ethical Problem 1950s • Ethics in business has to do with making the right choices - often there is no apparent one right way and one must choose the best in the circumstances. • Managers are sometimes faced with business choices that create tensions between ethics and profits, or between their private gain and the public good. Early 2000s Conditions of Ethical Dilemma • There are three conditions that must be present for a situation to be considered an ethical dilemma. • The first condition occurs in situations when an individual, called the…show more content…
ugh Hang Tough 5, 5 0, 10 10, 0 1, 1 Rat Rat Hang Tough Prisoners’ Dilemma – 1 = first choice – 2 = second choice – 3 = third choice – 4 = fourth choice Hang Tough 5, 5 0, 10 10, 0 1, 1 Prisoners’ Dilemma Prisoners’ Dilemma • Generalized Form: • Rank Outcomes, from most preferred to least preferred Neither player can unilaterally improve his/her position Nash Equilibrium Don’t Cooperate Don’t Cooperate 3,3 Cooperate 1,4 Cooperate 4,1 2,2 • Choice is “cooperate” or “not cooperate” Prisoners’ Dilemma 5 4/8/2015 Prisoners’ Dilemma • Symbolic Form: • We’re in a Prisoner’s Dilemma situation whenever: T>R>P>S Prisoners’ Dilemma • Note that even if we start at the cooperative outcome, that outcome is not stable • Each player can improve his/her position by adopting a different strategy Temptation to defect > Rewards of Cooperation Rewards > Punishment for Not Cooperating Punishment > Sucker’s Payoff Don’t Cooperate Don’t Cooperate 3,3 Prisoners’ Dilemma Cooperate 1,4 • But since both players have changed strategy we end up at the non-cooperative outcome, where both players are worse off than if they had chosen to cooperate Cooperate 4,1 2,2 Prisoners’ Dilemma 6 4/8/2015 Don’t Cooperate Don’t Cooperate 3,3 Prisoners’ Dilemma Cooperate 1,4 • And, as we noted, this non-cooperative outcome is also a Nash

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