• HOME
  • NHL Teams
    • North Division
      • Calgary Flames
      • Edmonton Oilers
      • Montreal Canadiens
      • Ottawa Senators
      • Toronto Maple Leafs
      • Vancouver Canucks
      • Winnipeg Jets
    • East Division
      • Boston Bruins
      • Buffalo Sabres
      • New Jersey Devils
      • New York Islanders
      • New York Rangers
      • Philadelphia Flyers
      • Pittsburgh Penguins
      • Washington Capitals
    • Central Division
      • Carolina Hurricanes
      • Chicago Blackhawks
      • Columbus Blue Jackets
      • Dallas Stars
      • Detroit Red Wings
      • Florida Panthers
      • Nashville Predators
      • Tampa Bay Lightning
    • West Division
      • Anaheim Ducks
      • Arizona Coyotes
      • Colorado Avalanche
      • Los Angeles Kings
      • Minnesota Wild
      • San Jose Sharks
      • Seattle Kraken
      • St. Louis Blues
      • Vegas Golden Knights
  • Headlines
  • NHL Rumors
  • NHL Prospects
  • World Juniors
  • Archives
  • Podcast Network
  • More…
    • CHL
      • Ontario Hockey League
      • Quebec Major Junior Hockey League
      • Western Hockey League
    • Columns
    • Women’s Hockey
    • Other Leagues
    • NHL Entry Draft
    • Books
    • NHL History
  • Log in
The Hockey Writers
  • Site Index
  • NHL Salary Caps
  • Hockey 101: A Beginner’s Guide
  • Join Our Team
  • Free Newsletter
  • Store
  • Log in
The Hockey Writers
  • HOME
  • NHL Teams
    • North Division
      • Calgary Flames
      • Edmonton Oilers
      • Montreal Canadiens
      • Ottawa Senators
      • Toronto Maple Leafs
      • Vancouver Canucks
      • Winnipeg Jets
    • East Division
      • Boston Bruins
      • Buffalo Sabres
      • New Jersey Devils
      • New York Islanders
      • New York Rangers
      • Philadelphia Flyers
      • Pittsburgh Penguins
      • Washington Capitals
    • Central Division
      • Carolina Hurricanes
      • Chicago Blackhawks
      • Columbus Blue Jackets
      • Dallas Stars
      • Detroit Red Wings
      • Florida Panthers
      • Nashville Predators
      • Tampa Bay Lightning
    • West Division
      • Anaheim Ducks
      • Arizona Coyotes
      • Colorado Avalanche
      • Los Angeles Kings
      • Minnesota Wild
      • San Jose Sharks
      • Seattle Kraken
      • St. Louis Blues
      • Vegas Golden Knights
  • Headlines
  • NHL Rumors
  • NHL Prospects
  • World Juniors
  • Archives
  • Podcast Network
  • More…
    • CHL
      • Ontario Hockey League
      • Quebec Major Junior Hockey League
      • Western Hockey League
    • Columns
    • Women’s Hockey
    • Other Leagues
    • NHL Entry Draft
    • Books
    • NHL History
Home
The Business of Hockey

The Prisoner’s Dilemma and the NHL Lockout

By Ryan Pike October 24th, 2012

Facebook Twitter LinkedIn WhatsApp
Gary Bettman

Based on prior history, NHL commissioner Gary Bettman probably expects the NHLPA to cave sooner or later. (Brad Penner-US PRESSWIRE)

As we languish in the midst of the sixth week of the lockout between the National Hockey League and its players, a common question has emerged.

Why are we stuck in this deadlock?

After over a month, with the fate of the season hanging in the balance, neither side appears to be ready to budge. As a result, it’s becoming increasingly likely that not only will there not be a full 2012-13 regular season, but there may not be a season at all.

A fairly simple understanding of why this may be the case can be found in the realm of game theory. More specifically, in a quick glance at the prisoner’s dilemma, as formulated by Canadian mathematician Albert W. Tucker.

THE PRISONER’S DILEMMA

At its core, the dilemma is rather simple. Two individuals are arrested and held separately. Each is offered the following deal: if they turn informant on the other, they’ll go free and the other person will get a large jail sentence. If they don’t cave and turn informant, they’ll each get a lighter sentence for refusing to cooperate. But if both of them inform on each other, they’ll each get a medium-length sentence. If each individual assumes that the other person is going to inform on them, their best option is to also inform (a choice between a medium and a large jail sentence). If each individual assumes that the other person is not going to inform on them, their best option is still to also inform (a choice between no sentence and a light jail sentence). (Informing on the other person is known as a “dominant strategy” in this situation.)

From the perspective of the lockout, the incentives for each side can be framed like this:

  • If both the NHL and NHLPA cooperate, a deal will be made rather quickly, but it’s unlikely that either side will get entirely what they want as each has to move off their “core” position a bit. But there’s no (or very minimal) lost revenue for either side as a result of any stoppage, as well as minimal fan and sponsor blow-back.
  • If neither side cooperates several games (if not the whole season) will be lost. For the NHLPA, this means lost pay for its members and a potential loss of future revenue (NHL salaries are partially based on past performance and expectations of future performance, and players who haven’t played in awhile could be expected to be rusty and less good at hockey). Similarly, the NHL owners face a loss of game-related revenues as well as the potential for lost sponsorships and the loss of future game-related revenues, in that repeatedly cancelling games could cause fans to tune out of hockey when it returns.
  • The ideal situation for either side, however, is that their opponent caves and gives them a good deal, and ideally does so quickly, so as to minimize any fan or sponsor blow-back over lost games.

THE NHL PERSPECTIVE

From the perspective of the National Hockey League owners, the ideal situation is that the players cave and cave quickly. Despite the loss of revenue due to the 2004-05 lockout, the NHL owners likely perceive the outcome of that labour impasse as the union caving. The NHLPA claimed that they would not accept a salary cap during the last stoppage. Fast-forward to the end of the lockout and that’s exactly what happened. The NHLPA accepted a salary cap and the NHL got the cost certainty that they wanted.

As a result, the NHL owners probably expect the players to cave once again. Therefore, the optimal course of action for the owners is to simply wait out the union and not budge off of their hard-line stance. If they do this and the union cooperates (or “caves”), they get what they wanted like last time. If the union doesn’t cooperate right away, the NHL owners save on a year of paying the players and probably arrive at an eventual compromise deal somewhere down the line that’s better than the existing agreement.

THE NHLPA PERSPECTIVE

Now, if you’re the NHLPA and you know that the perception is that you caved last time around, you’re going to try to choose an optimal strategy presuming that the other side is going to dig in and hope you cave again.

If the NHLPA expects the owners to dig in and try to wait them out – just like last time – what’s their best option? They’ll try to wait them out, too, and hope that the NHL has a division in their ownership (just like in the 1994 lockout) and cracks from within, causing their side to cave.

As a result, the NHLPA’s strategy appears to be akin to triggering a staring contest with the NHL owners and hoping against hope that the other side will blink first.

AND NOW, A DEADLOCK

Based on the past, each side expects the other side to cave sooner or later. As a result, the optimal strategy for each is to dig in and wait for the other side to crack. Given these likely optimal strategies, the lack of major compromise by either side shouldn’t shock anybody.

However, the length of the deadlock can be estimated with a bit of simple math.

Once the gains to be won from a new deal are less than the losses from waiting the other side out, each side gradually becomes indifferent towards waiting even longer or conceding. However, considering that neither side can really agree on what constitutes hockey-related revenues, the internal calculations for each side in terms of deciding where the “indifference point” is reached are anybody’s guess.

Of course, these calculations completely ignore the third party to this dispute, the fans, who are power-less in the current decision-making structure.

  • Tags
  • Game Theory
  • Lockout 2012
Facebook Twitter LinkedIn WhatsApp

Get theScore App Now!
Recent Posts
Jan 18th 9:35 AM
New York Islanders

New York Islanders Open Season With Mixed Results

Jan 18th 9:25 AM
Column

Canadiens News and Rumors: Dubois, ECHL, Prospects & More

Jan 18th 9:15 AM
Calgary Flames

Flames Weekly: Impressive Shutout Follows Shaky Season Opener

Jan 18th 9:05 AM
Winnipeg Jets

Shorthanded Jets Face Tough Early Test

Jan 18th 8:55 AM
Boston Bruins

6 Bruins Standouts from Opening Series Versus Devils

Jan 18th 8:45 AM
New York Rangers

Rangers’ First 2 Games Offer Stark Contrasts

Jan 18th 8:35 AM
Boston Bruins

Today in Hockey History: Jan. 18

Jan 17th 6:35 PM
Columbus Blue Jackets

Blue Jackets Hope Early Start Leads to Bounce Back

Jan 17th 5:50 PM
New York Islanders

Islanders Loss Can’t Be Pinned on Sorokin Entirely

Jan 17th 5:15 PM
Detroit Red Wings

Red Wings: Zadina’s Start Sparks the Imagination

Editor’s Picks
World Junior Championship All-Time Leading Scorers

World Junior Championship All-Time Leading Scorers

2021 Guide To the World Junior Championship

2021 Guide To the World Junior Championship

Masthead

Newsletters

RSS Feeds

Privacy Statement

Contact Us

About THW…

Founded in 2009, The Hockey Writers is a premier destination for news and information on everything hockey. Updated daily with news and features from over 130 writers worldwide. Over 2 million monthly readers now come to THW for their hockey fix.

© The Hockey Writers 2020. All rights reserved.
logo
  • HOME
  • Hockey Headlines
  • NHL Rumors
  • North Division
    • Calgary Flames
    • Edmonton Oilers
    • Montreal Canadiens
    • Ottawa Senators
    • Toronto Maple Leafs
    • Vancouver Canucks
    • Winnipeg Jets
  • East Division
    • Boston Bruins
    • Buffalo Sabres
    • New Jersey Devils
    • New York Islanders
    • New York Rangers
    • Philadelphia Flyers
    • Pittsburgh Penguins
    • Washington Capitals
  • Central Division
    • Carolina Hurricanes
    • Chicago Blackhawks
    • Columbus Blue Jackets
    • Dallas Stars
    • Detroit Red Wings
    • Florida Panthers
    • Nashville Predators
    • Tampa Bay Lightning
  • West Division
    • Anaheim Ducks
    • Arizona Coyotes
    • Colorado Avalanche
    • Los Angeles Kings
    • Minnesota Wild
    • San Jose Sharks
    • Seattle Kraken
    • St Louis Blues
    • Vegas Golden Knights
  • World Juniors
  • CHL
    • Ontario Hockey League
    • Quebec Major Junior Hockey League
    • Western Hockey League
  • THW Podcast Network
  • Store
  • FREE Newsletter
  • Search THW
  • More…
    • Join Our Team
    • The THW Archives
    • Prospects
    • The Goalie Page
    • NHL Salary Cap Information