From a rather interesting article from mckinsey.com - Leadership and behaviour: Mastering the mechanics of reason and emotion.
Eric Maskin: Mechanism design recognizes the fact that there’s often a tension between what is good for the individual, that is, an individual’s objectives, and what is good for society—society’s objectives. And the point of mechanism design is to modify or create institutions that help bring those conflicting objectives into line, even when critical information about the situation is missing.
An example that I like to use is the problem of cutting a cake. A cake is to be divided between two children, Bob and Alice. Bob and Alice’s objectives are each to get as much cake as possible. But you, as the parent—as “society”—are interested in making sure that the division is fair, that Bob thinks his piece is at least as big as Alice’s, and Alice thinks her piece is at least as big as Bob’s. Is there a mechanism, a procedure, you can use that will result in a fair division, even when you have no information about how the children themselves see the cake?
Well, it turns out that there’s a very simple and well-known mechanism to solve this problem, called the “divide and choose” procedure. You let one of the children, say, Bob, do the cutting, but then allow the other, Alice, to choose which piece she takes for herself. The reason why this works is that it exploits Bob’s objective to get as much cake as possible. When he’s cutting the cake, he will make sure that, from his point of view, the two pieces are exactly equal because he knows that if they’re not, Alice will take the bigger one. The mechanism is an example of how you can reconcile two seemingly conflicting objectives even when you have no idea what the participants themselves consider to be equal pieces.The bit I quoted above really struck me as either lazy thinking, or unintentional blindness.
It bugs me that Eric Maskin uses children in a room with cake to generalise about human behaviour, without specifying important stuff.
Where are the children from?
What are their cultural norms?
What is their relationship to each other?
Will their actions have any repercussions beyond getting less cake?
Happily ignoring all those things, Maskin goes on to apply this concept to management and organisations. Which means that power differentials and politics are also ignored, along with what I previously listed about cultural norms and relationships. It also focuses on an extremely short-term goal.
If the cultural norm is to appear generous...
...then Bob will cut an obviously smaller piece, which lets Alice choose the bigger piece if she wishes to. She may not, she may also wish to appear gracious, and take the smaller piece. But regardless of what happens, it's doubtful to me that the cake would be divided equally.
If Bob has more power - maybe he has the ability to beat Alice up without being scolded for it, even if he doesn't actually want to
...then Bob will cut whatever he thinks is fair, and count on Alice's fear of him, and understanding of the difference in power, to control which piece she takes. Which means that if Bob cuts an obviously smaller piece, he'll get a nice big piece. And if he cuts an even portion, then he'll get to feel good about himself. And in both cases, Alice's 'choice' isn't really a free choice.
Srsly Nugget? It's just cake!
You could argue that Maskin stated that 'Bob and Alice's objectives are each to get as much cake as possible', but it's pretty obvious that cake is a metaphor for money (or resources).
The fact is, in the real world, choices are rarely so clear and simple. There are always trade-offs. Of course every worker wants to 'get as much cake as possible'. ;) But maybe some workers will take less cake now, if it means a more reliable supply of cake in the future. (I.e. a foreign worker on a temporary visa will likely settle for less 'cake' until they're able to get a permanent visa.)
Humans are complicated. It's never just cake. ;)