Firms often delegate important decisions to committees which are set up specifically for that purpose; for example selection committees. We analyze the equilibrium behavior of a game in which committee members (the players) interview candidates sequentially, either hiring or going on to the next one. The players have differing evaluations of candidates (e.g. one cares about typing skills; the other about IT skills), which become their utilities if the candidate is hired. We then consider the optimal design (rules of the game) of such a committee, from the point of view of the firm. That is, which rules hire candidates which maximize the firm's utility. Our committee game has a first round in which the members sequentially, by order of player number, say 'yea' or 'nea' to the candidate. If there are sufficient 'yeas' then she is tentatively hired; otherwise she is rejected. In the former case, members who said nea can veto the candidate in the second round. Thus the candidate is either hired, rejected, or vetoed. In the last case, the member casting a veto has one less to use on later candidates. We analyze equilibria where a player may say 'yea' to a candidate he would prefer not to hire, in order to force the other player to use up a valuable veto. We show that for the uniform candidate distribution there is a unique equilibrium and better candidates for the firm are hired when there are more vetoes. However we exhibit a candidate distribution where increasing the numbers of vetoes results in hiring worse candidates.
- Stochastic game
ASJC Scopus subject areas
- Statistics and Probability
- Mathematics (miscellaneous)
- Social Sciences (miscellaneous)
- Economics and Econometrics
- Statistics, Probability and Uncertainty