A game theory perspective on product development project charters: the project manager - project sponsor relationship as an iterated Prisoner's Dilemma

Abstract

The product development processes of many firms include a project charter - a document that formally authorises a product development project, establishes expectations and success criteria, and provides a project manager with authority and resources. Neither the project sponsors nor the project manager have complete and perfect knowledge; thus the project charter is the outcome of negotiation, estimation, and forecasting by stakeholders with partially aligned and partially differing incentives - a situation that game theorists characterise as a 'mixed-motive game'. This article develops a conceptual game theory model of the project manager - project sponsor relationship, then draws on past research on analytic game theory, evolutionary game theory, and behavioural game theory to develop propositions about cooperation on project charters and implications for theory and practice. The model and propositions developed from the model contribute to our conceptual understanding of cooperation within product development organisations and the theoretical underpinnings of project management.