The Tao of Gaming

As I was driving home, the news was discussing an immigration speech the President gave. Given recent discussions about the utility of game theory, I was reminded about some thoughts I had on this a while back. Warning — very little to do with games. Feel free to skip.

The problem with the current situation is that the incentives all align to do nothing. The employer doesn't want to rat out the workers — he wants cheap labor. The workers don't want to get deported. Fortunately, game theory has a solution — turn this into a prisoner's dilemma. But how?

Say that the current fine is $10,000 per illegal employee. (I don't know what it is, but it's a nice round number). The solution is to give half that amount to the person who fingers the employer, including the illegal employee. Suddenly the two sides aren't so cozy. Remember, that unlike many of the cases in nature, etc, this is a single shot game. If the employee defects (calls the Feds), then the employer can't retaliate. Also, as the number of employees grows, each has to be concerned that another employee is willing to sell them all out for a large payday. (Sure, you may not rat yourself out for $5k, but would you rat yourself out for $50k? That's a large chunk of change to have in Latin/South America ... more than you'll earn in several years).

As an added incentive, give the illegal employee a guest worker permit (in addition to the money) and employers would have to be fools to hire illegals (that weren't relatives or some such).

[I'd personally combine this with immigration reform, but that's not a game-theoretic issue].

Update: The rest of the money can go into the general gov't coffers (or wherever it goes now), but allocating some as a pool for hiring new enforcers or paying bonuses would give the responsible agency (DHS now, I guess) some incentive, too.