Case Study

2256 Words May 1st, 2015 10 Pages
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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