Exit, Voice, and Loyalty Model - Wikipedia

The Exit, Voice, Loyalty (EVL) model or Exit, Voice, Loyalty, Neglect (EVLN) is used in the fields of comparative politics and organizational behavior. Exit,Voice,andLoyaltyModel FromWikipedia,thefreeencyclopedia Jumptonavigation Jumptosearch Frameworkformodellingpoliticalandeconomicbehavior TheEVLModelwiththeCitizenasplayer1andtheGovernmentasplayer2.Eisthevaluethecitizengetsfromexiting,ListhevaluetheGovernmentgetsfromtheCitizen'sloyalty,andcisthecosttheCitizenusingtheirvoice.Inthismodel,thebenefitupforgrabsbetweentheCitizenandtheGovernmentisworth1. TheExit,Voice,Loyalty(EVL)model[1]orExit,Voice,Loyalty,Neglect(EVLN)isusedinthefieldsofcomparativepoliticsandorganizationalbehavior.Itisanextensiveformgameusedtomodelinteractionstypicallyinvolvingnegativechangestooneplayer'senvironmentbyanotherplayer.[1]TheseconceptsfirstappearedinAlbertHirschman'smorebroadlyfocused1970book,Exit,Voice,andLoyalty:ResponsestoDeclineinFirms,Organizations,andStates.[2]Acommonuseinpoliticalscienceisbetweencitizensandtheirgovernment.UsuallyinthisusetheCitizenplayerisanygroupwithinasocietyrangingfromasingleindividualtothecitizenryasawhole.[3] Contents 1Model 1.1FormalDefinition 1.2TheoreticalDefinition 1.3Dependent/AutonomousGovernmentsandCredibleExitThreats 2DifferentOutcomes 3Applications 3.1DependentGovernment 3.2Protests 4Exit,Voice,Loyalty,NeglectModel 4.1Exit 4.2Voice 4.3Loyalty 4.4Neglect 5References Model[edit] TheEVLModelinvolvestwoagentsandtheirresponsestoachangeinitiatedbeforethegamebegan.ThefirstagentiscommonlyreferredtoastheCitizenandthesecondiscommonlyreferredtoastheGovernment.EVLassumesthatthechangeimplementedbeforethegamebeganwasperformedbytheGovernmentandnegativelyharmstheCitizen. FormalDefinition[edit] TheformaldefinitionofEVListhefollowing:[3] Therearetwoplayers: N = { Citizen , Government } {\displaystyleN=\{{\text{Citizen}},{\text{Government}}\}} .The Citizen {\displaystyle{\text{Citizen}}} movesfirst,andchoosesamongthreeactions { exit , voice , loyalty } {\displaystyle\{{\text{exit}},{\text{voice}},{\text{loyalty}}\}} .Ifthe Citizen {\displaystyle{\text{Citizen}}} chooses voice {\displaystyle{\text{voice}}} ,then Government {\displaystyle{\text{Government}}} caneither respond {\displaystyle{\text{respond}}} or ignore {\displaystyle{\text{ignore}}} .Ifthe Government {\displaystyle{\text{Government}}} choosesto ignore {\displaystyle{\text{ignore}}} ,the Citizen {\displaystyle{\text{Citizen}}} thenchoosesbetween exit {\displaystyle{\text{exit}}} or ignore {\displaystyle{\text{ignore}}} .Subsequenttothis(andanyotheractionchoices),thegameterminates. Formally,thisisrepresentedbythesetofhistories H = { ∅ , ( exit ) , ( voice ) , ( loyalty ) , ( voice , respond ) , ( voice , ignore ) , ( voice , ignore , exit ) , ( voice , ignore , loyalty ) } . {\displaystyleH=\{\emptyset,({\text{exit}}),({\text{voice}}),({\text{loyalty}}),({\text{voice}},{\text{respond}}),({\text{voice}},{\text{ignore}}),({\text{voice}},{\text{ignore}},{\text{exit}}),({\text{voice}},{\text{ignore}},{\text{loyalty}})\}.} Theterminalhistories,uponreachingwhichthegameterminates,isgivenby Z = { ( exit ) , ( loyalty ) , ( voice , respond ) , ( voice , ignore , exit ) , ( voice , ignore , loyalty ) } . {\displaystyleZ=\{({\text{exit}}),({\text{loyalty}}),({\text{voice}},{\text{respond}}),({\text{voice}},{\text{ignore}},{\text{exit}}),({\text{voice}},{\text{ignore}},{\text{loyalty}})\}.} Forallotherhistories,oneofthetwoplayersmakesamove,andthisisgivenbytheplayerfunction P ( ∅ ) = Citizen ,   P ( voice ) = Government ,   P ( voice , ignore ) = Citizen . {\displaystyleP(\emptyset)={\text{Citizen}},\P({\text{voice}})={\text{Government}},\P({\text{voice}},{\text{ignore}})={\text{Citizen}}.} Theutilityfunctionofthe Citizen {\displaystyle{\text{Citizen}}} isdefinedas   u C ( exit ) = E ,   u C ( loyalty ) = 0 ,   u C ( voice , respond ) = 1 − c , {\displaystyle\u_{C}({\text{exit}})=E,\u_{C}({\text{loyalty}})=0,\u_{C}({\text{voice}},{\text{respond}})=1-c,}   u C ( voice , ignore , exit ) = E − c ,   u C ( voice , ignore , loyalty ) = 0 − c . {\displaystyle\u_{C}({\text{voice}},{\text{ignore}},{\text{exit}})=E-c,\u_{C}({\text{voice}},{\text{ignore}},{\text{loyalty}})=0-c.} Inwords,the Citizen {\displaystyle{\text{Citizen}}} incursacostof c {\displaystylec} whenevertheychoosetoraisetheir voice {\displaystyle{\text{voice}}} ,andifthe Government   responds {\displaystyle{\text{Government}}\{\text{responds}}} ,theygetapayoffof 1 {\displaystyle1} .Irrespectiveofthischoice,theycanchooseto exit {\displaystyle{\text{exit}}} forapayoffof E {\displaystyleE} orremain loyal {\displaystyle{\text{loyal}}} forpayoffofzero. Similarly,thepayofffunctionofthe Government {\displaystyle{\text{Government}}} isdefinedas   u G ( exit ) = 1 ,   u G ( loyalty ) = 1 + L ,   u G ( voice , respond ) = L ,   u G ( voice , ignore , exit ) = 1 ,   u G ( voice , ignore , loyalty ) = 1 + L . {\displaystyle\u_{G}({\text{exit}})=1,\u_{G}({\text{loyalty}})=1+L,\u_{G}({\text{voice}},{\text{respond}})=L,\u_{G}({\text{voice}},{\text{ignore}},{\text{exit}})=1,\u_{G}({\text{voice}},{\text{ignore}},{\text{loyalty}})=1+L.} Inwords,the Government {\displaystyle{\text{Government}}} incursacostofonefor responding {\displaystyle{\text{responding}}} tothe Citizen'svoiced {\displaystyle{\text{Citizen'svoiced}}} concerns,andgainsapayoffof L {\displaystyleL} ifthe Citizen {\displaystyle{\text{Citizen}}} doesnot exit {\displaystyle{\text{exit}}} . TheoreticalDefinition[edit] TheprecursorypolicythattheGovernmenthasimplementedhastheeffectofremovingabenefitwiththevalueof1fromtheCitizenandgivingittotheGovernment.Thevaluewaschosentobe1sothatallcomparisonswithinthegamecaneasilybeconvertedtoratiosandthenadaptedtoothersituationswherethetruevalueofthebenefitisknown. InEVL,allpossibleactionsthatcanbetakenbytheCitizenaregroupedintooneofthreeoptions.ExitoptionsarethoseinwhichtheCitizenacceptsthelossofthebenefitandinsteadalterstheirbehaviortogetthebestpossiblealternative.Examplescouldincluderelocatingassetstoavoidanewtax,reincorporatingabusinesstoavoidnewregulations,buyinggoodsfromadifferentstorewhenthequalityoftheoriginaldiminishes,votingouttheincumbent,etc.[1]ThepayoffofanExitoptionfortheCitizenisthevariableEandtheGovernmentgetstokeepthe1ittookinitially.[1][3] LoyaltyoptionsareoneswheretheCitizenchoosestoputupwiththenewpolicyandnotaltertheirbehavior.ThepayofffortheCitizenis0astheydecidetotakethelossandtheGovernmentreceivesthe1ittookplusthevalueoftheCitizen'sLoyalty.ThevalueoftheCitizen'sLoyaltyisthevariableL.[1][3] VoiceoptionsarewheretheCitizenmakesanactiveefforttoshowtheirdissatisfactionwiththenewpolicyandtriestogettheGovernmenttochangeitsmind.Examplescouldbelobbying,protesting,petitioning,etc.[1]VoiceoptionsdonothaveimmediatepayoffsbutareintendedtogivetheGovernmentachancetoRespondtotheCitizenandrevertthepolicy.IntheeventtheGovernmentdoesRespond,thepayofffortheCitizenisthe1theGovernmentinitiallytookminusthecostofusingVoice.Thiscostisthevariablec.IftheGovernmentchoosestoIgnorethentheCitizencanstillExitorremainLoyal.NomatterwhattheCitizenchooses,theystillhavetobearthecostofusingtheirVoiceandsothepayoffforExitwouldbeE-cand0-cforremainingLoyal.TheGovernmentwouldreceivethepayoffofL(thevalueoftheCitizen'sLoyalty)iftheychosetoRespondandrevertthepolicy,1iftheychosetoIgnoreandtheCitizenExits,and1+LiftheyIgnoreandtheCitizenchoosestoremainLoyal.[1][3] Dependent/AutonomousGovernmentsandCredibleExitThreats[edit] NashEquilibriaforaDependentGovernment(L>1)andaCitizenwithaCredibleExitThreat(01andiftheGovernmentisautonomous,i.e.notdependentontheloyaltyandsupportoftheCitizen,L<1.[1]ExamplesofGovernmentdependencecouldbeelectedofficialsbeingdependentonthesupportoftheirvoters,businessownersbeingdependentontheirworkers,governmentsbeingdependentoninstitutionsforeconomicwell-being,etc.[1]AnimportantnoteisthatthevaluetheGovernmentplacesontheLoyaltyfromtheCitizenisinrelationtothebenefitittook.DifferentCitizenplayersalsohavedifferentpossibleExitoptions.IftheCitizenshaveaviableExitoption,sometimescalledacredibleExitthreat,thenE>0,andiftheCitizendoesnothaveanygoodorcredibleExitoptionsthenE<0.Alongwiththis,thecostofusingtheVoiceoptionchangesdependingontheCitizenplayeraswell. DifferentOutcomes[edit] NashEquilibriaforwhentheCitizenhasnoCredibleExitThreat(E<0).NoticethatitdoesnotmatterwhethertheGovernmentisDependentorAutonomous(Lcantakeanyvalue). TheEVLgameissolveddifferentlywhethertheGovernmentisdependentorautonomousfromtheCitizen,whethertheCitizenhasordoesnothaveacredibleExitoption,andthecostofusingVoice.[3][1] NashEquilibriaforanAutonomousGovernment(L<1)andaCitizenwithaCredibleExitThreat(E>0) EVLshowsthattheonlytimeaGovernmentwillRespondtotheCitizenusingtheirVoiceiswhentheGovernmentisdependentonthesupportoftheCitizen(L>1)andwhentheCitizenhasacredibleExitoption(E>0).WithallothercombinationsofEandLtheGovernmentwillchoosetoIgnoretheCitizeniftheydecidetousetheirVoiceandsotheCitizenwillchoosetoExitorremainLoyalinsteadratherthanbearthecostofusingVoice.Although,ifthecostofusingVoice(c)becomeshighenough(E>1-c)thenevenadependentGovernmentcanpreventaCitizenwithacredibleexitthreatfromusingtheirVoice.[1] DependingonthevaluesofE,L,andcfordifferentGovernmentandCitizenplayers,theGovernmentwilleitherenactornotenacttheinstigatingpolicy.TheEVLgameislargelyneverplayedoutinrealitybutisusedtomodelwhyinstitutionsandindividualswithrelationshipslikethoseinEVLbehavethewaytheydo.Inrealitytheplayerstypicallydonothavecompleteinformation.Typically,thegamecanbeassumedashavingaprecursorystepinwhichtheGovernmentdecideswhetherornottoimplementthepolicy.[1] Applications[edit] ManyoftheapplicationsofthistheoryinvolvethedifferentwaysinwhichtheextensiveformgameresolveswhenthevaluesofE,L,andcareadjusted. DependentGovernment[edit] WhentheCitizenhasaviableExitoptionandtheGovernmentisdependentontheLoyaltyoftheCitizen(i.e.E>0,L>1)theGovernmentwouldnottrytotakeawaythebenefittobeginwithasthegamewouldendwithasitknewitwouldhavetoRespond.AparallelcanbedrawntothestructuraldependenceofthestateoncapitalwithinStructuralMarxismwherethestateisseenasbeingdependentoncapitalforitsexistenceandthecapitalistshaveviableExitoptionsthroughtheireasilymobileassetswhilelabordoesnot.[1] IncaseswheretheCitizenhasnoviableExitoptionandtheGovernmentisdependentontheLoyaltyoftheCitizen(i.e.E<0,L>1)theCitizenexercisesLoyaltyinthefaceoftheenvironmentalchange.RealworldexamplescanbedrawntotheFinancialcrisisof2007–2008intheUnitedStatesregardingthefinancialbailoutofthefinancialandautomobilesectors.WithinaweekofLehmanBrothersdeclaringbankruptcytheUnitedStatesTreasurydraftedtheTroubledAssetReliefProgramwhichplannedtospend$700billiontobuyassetsfromstrugglingbanksandwaspassedtwoweekslater.[1]ThethenTreasurySecretaryPaulsonsaid"youwon'tleavethisroomuntilyouagreetotakethismoney"totheheadsofthelargestbanksduringameetinginWashingtonD.C.[1]Ford,GeneralMotors,andChryslersenttheirchiefexecutivestoCongresstoaskforabailoutof$25billionfromtheTroubledAssetReliefProgram.MembersofCongressinitiallyrefusedthebailoutandmockedtheexecutiveshavingflownprivatejetstothemeeting.Theylaterreturnedhavingcarpooledandweregranted$13.4billion.[3]Theautomotiveindustryhadtogothroughmanymorehurdlestoreceiveanyfundsthanmembersofthefinancialsector.[4]ThegovernmentandeconomyweredependentonthesurvivalofbothsectorsbutthedifferenceinresponsetoeachfacingfinancialtroublecanbeinterpretedasadifferenceinExitoptionbetweenthetwo.TheautomotivesectorhasmuchlessmobileassetsasfactoriestakemuchlongertomoveoutsidethecountrycomparedtofinancialinstitutionsandsocanbethoughtofashavingamuchweakerExitoption.[1] Otherexamplesincludepoliticalpartieswhorequirethesupportofcertaingroupstogetelectedbutthosegroupshavenoviablealternativeforwhomtovotefor.[1]InthisscenariothepoliticalpartyassumestheroleoftheGovernmentandthegroupistheCitizen.TheGovernmentisdependentontheCitizenbuttheCitizeniswithoutaviableExitoption(i.e.L>1,E<0). Protests[edit] OneofthemostobviouswaysCitizenscanuseVoiceisbyprotesting.TheEVLModelpredictsthattheCitizenwillonlyusetheirVoiceiftheyhaveaviableExitoptionandtheGovernmentisdependent(E>0,L>1).However,iftheGovernmentknowstheCitizenwilluseVoiceandforceittorespondandrevertthechangeitmade,theGovernmentwouldnotenactthechangeinthefirstplace.TheEVLModelexplainsthattheonlytimeprotestsorotherformsofVoicewouldbeobservediswhentheGovernmentdoesnotknowwhethertheCitizenhasacredibleExitoption(i.e.theGovernmentdoesnotknowE>0)butknowsit'sdependent,orwhentheCitizendoesnotknowthattheGovernmentisautonomous(i.e.theCitizendoesnotknowL<1). Exit,Voice,Loyalty,NeglectModel[edit] Exit[edit] Thisincludesleavingtheorganization,transferringtoanotherworkunit,oratleasttryingtogetawayfromtheunsatisfactorysituation.Thegeneraltheoryisthatjobdissatisfactionbuildsovertimeandiseventuallystrongenoughtomotivateemployeestosearchforbetterworkopportunitieselsewhere.Thisislikelytruetosomeextent,butthemostrecentopinionisthatspecific'shockevents'quicklyenergizeemployeestothinkaboutandengageinexitbehavior.Forexample,theemotionreactionyouexperiencetoanunfairmanagementdecisionoraconflictepisodewithaco-workermotivatesyoutolookatjobadsandspeaktofriendsaboutjobopportunitieswheretheywork.Thisbeginstheprocessofrealigningyourself-conceptmorewithanothercompanythanwithyourcurrentemployer. [5] Voice[edit] Voicereferstoanyattempttochange,ratherthanescapefrom,thedissatisfyingsituation.Voicecanbeconstructiveresponse,suchasrecommendingwaysformanagementtoimprovethesituation,oritcanbemoreconfrontational,suchasbyfilingformalgrievances.Intheextreme,someemployeesmightengageincounterproductivebehaviorstogetattentionandforcechangesintheorganization. Loyalty[edit] AccordingtoA.O.Hirschman,theauthorofExit,Voice,andLoyalty,theloyaltyofamembertotheorganizationhebelongstoishigherwhentheentrancecosts(physical,moral,material,orcognitive)arehigher.Loyaltywouldbecharacterizedaspassivelywaitingforconditionstoimprove. Neglect[edit] Neglectincludesreducingworkefforts,payinglessattentiontoquality,andincreasingabsenteeismandlateness.Itisgenerallyconsideredapassiveactivitythathasnegativeconsequencesfortheorganization.TheNeglectresponseispassivelyallowingforconditionstoworsen. References[edit] ^abcdefghijklmnopq1962-,Clark,WilliamRoberts(2017-03-28).Principlesofcomparativepolitics.Golder,Matt,,Golder,SonaNadenichek(Third ed.).ThousandOaks,CA.ISBN 9781506318127.OCLC 965120448.CS1maint:numericnames:authorslist(link) ^Hirschman,Albert(1970).Exit,Voice,andLoyalty:ResponsestoDeclineinFirms,Organizations,andStates.HarvardUniversityPress.pp. 176.ISBN 0-674-27660-4. ^abcdefgClark,WilliamRoberts;Golder,Matt;Golder,SonaNadenichek(2013)."Clark,WilliamRoberts,MattGolder,andSonaN.Golder."Powerandpolitics:insightsfromanexit,voice,andloyaltygame".UniversityofMichiganandPennStateUniversity–viaGoogleScholar. ^"WhyCitigroupgotDetroit'smoney-Nov.24,2008".money.cnn.com.Retrieved2019-02-03. ^Travaglione,SteveMcShane,MaraOlekalns,Tony(2012).Organisationalbehaviour(4th ed.).NorthRyde,N.S.W.:McGrawHillAustralia.p. 111.ISBN 9780071016261. 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