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Corporate Governance As A Repeated Game Prisoners' Dilemma - And The Push To The Defect-Defect Cell, Peter Cebon

Peter Cebon

Governance of strategic risk can be understood as a repeated-game prisoners’ dilemma. In the cooperate-cooperate cell, boards and managers work together in a trusting, highly communicative relationship to make sense of the environment and to create and enact a strategy. In the defect-defect cell, the board distrusts the CEO and is concerned with monitoring and incentive alignment. Organisations with a focused strategy built on innovation-like actions benefit from being in the cooperate-cooperate cell. However, various internal and institutional forces push organisations, and particularly listed corporations, to the defect-defect cell.