The updated version of the DOJ’s Guidance on Evaluation of Corporate Compliance Programs (”DOJ Guidance”) may turn prisoner’s dilemmas among corporations and their employees into races to rat on each other. How should we respond?
In game theory, the classic prisoner’s dilemma posits that if two suspects to a joint crime refuse to confess, each suspect will do a short stretch behind bars.
So, interrogators separate the suspects and offer each a time-limited deal: confess and rat on the other suspect. If the other suspect remains silent, the one who confesses and rats will serve no time while the other does a long stretch. If both confess and rat, each will serve a moderate sentence.
The dilemma leads each suspect to confess and rat on the other suspect. That’s because no matter what one suspect does, the other is better off confessing and ratting.
As a result, the prisoners serve more time that if they had both kept quiet.
Over the last 25 years, the Department of Justice has refined its real-world prisoner’s dilemma for corporations and their employees.
MORE FOR YOU
The DOJ prisoner’s...
This story is the second in an ongoing series on the Cost of Fraud, as Open the Books tallies the hidden fees on American tax returns. Click here to read the first story on fraudulent autism billi...