Each of us would have had to face this question at an interview, at least once. “What are your salary expectations?”. Have you ever wondered that this situation could be a prisoner’s dilemma? Come, let us analyze if it is one.
Following are a list of assumptions that I have taken to analyze this situation.
Assumptions:
· Candidate and interviewer do not know each other before the interview
· Candidate or the interviewer have not spoken to each other beforehand.
· Applying candidate is an engineer. Company is a mid-size engineering company. Position is a beginner position and any not executive/senior position.
Analysis using pay-off matrix:
From the pay-off matrix above, it is evident that both parties will opt for a higher number than what they have in their minds, irrespective of the choice of the other. However, it is also clear that this is not the best choice for both. For the interviewer, it is not the best as he will lose money. For the candidate, it is not the best since he has a risk of not getting this job. Therefore, it is a prisoner’s dilemma.
Nevertheless, there are some ways in which this dilemma can be overcome.
How to get out of this prisoner’s dilemma:
Following are some recommendations they could help to get out from the prisoner’s dilemma situation:
1. First-mover advantage: A candidate making the first move can mean two things. First, he is opening out for negotiation which could end in his favor. Second, he is giving the interviewer the chance to adjust his figure in the mind.
2. Price Negotiation[1]: If the interviewer makes the first move, the candidate could try to negotiate for a higher price instead of accepting the first offer made. The nearer he is to his benchmark value, the more satisfied he will be with his offer.
3. IG Metal Tarifvertrag[2]: there is a union system in Germany through which companies opt to pay their employees based on set tariffs. This eliminates confusion and brings clarity to both parties in terms of what to expect and what to offer.
4. Compromise: The candidates could ask for alternative benefits like a company car, for example, as an alternative to negotiating the price.
Conclusion:
The main message of prisoner’s dilemma is not to get caught in one.[3] Identifying this situation as a prisoner’s dilemma gives candidates options to foresee it and avoid it. The candidate can prepare him/her-self for this situation through exhaustive market analysis and know what to say when the question is asked.
As an additional note, another prisoner’s dilemmas that is very similar to the described scenario reflected from my favorite hobby of sewing is that of bargaining in a market (Stoffmarkt) – a place where cloth is sold in wholesale. Every time I ask, “How much does it cost?” to the seller and there is a moment of silence and I always ending up paying more that it was originally meant to be priced – Prisoner’s dilemma, isn’t it?! Now that I know it, I will not get caught in it the next time!
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