Economics of Retaining Employment: Whether a Company Should Supplement Funds for Educational Purpose

This paper analyzes the decision-making process between employees and employers regarding educational funding requests, using game theory. Employees, especially those with strong performance and alternative job offers, possess high bargaining power when negotiating for educational sponsorship as part of corporate social responsibility (CSR). The study models the interaction between employees and employers as a dynamic game with complete information, incorporating two subgames. In the first subgame, the employee decides whether to ask for funding, and the employer responds by accepting or rejecting the request. In the second subgame, the employee determines whether to stay or leave based on the employer's decision. The results show that the Nash Equilibrium suggests the optimal solution for both parties is for the employee to ask for funding, the employer to accept, and the employee to stay with the company. The analysis underscores the importance of investing in employee education for long-term organizational growth and retention. Keywords: Game theory, educational funding, employee bargaining power, corporate social responsibility (CSR), Nash equilibrium, employee retention.