According to different WSO threads, Guggenheim, RBC, Moelis, Perella Weinberg TPH, and HL have all started early recruiting for Summer 2020. I was talking about it with a friend and realized this can be explained in a bit through Game Theory. If you are unaware of Robert Axelrod’s tournaments that tested different strategies for maximizing utility in a prisoner’s dilemma, you can find a synopsis of Tit for Tat and 90% Tit for Tat in those links.
Up until SA 2019 recruiting, it has inched up earlier to end of summer/beginning of fall when students are on campus. Well Fargo jumped this for SA 2019 and started recruiting in March 2018, thus “defecting” in a game in which participants were mostly “cooperating” by keeping recruiting in fall. This could be explained by WF using a 90% Tit for Tat strategy, by not cooperating with cooperating players. This defection thus (assumingly) gave them a better shot at getting talent by giving offers that expire before other banks came on campus.
In the next round of the game, we see the rest of the banks mirroring this defection and moving up to recruiting for SA during students’ sophomore fall. By continuing a Tit for Tat strategy, it is expected to see other “defections,” as earlier recruiting will most likely come with negative externalities that outweigh getting a jump on the other banks. I am not sure what those will be, but shared my opinion on how I think the recruiting timeline will play out on the Is Summer Analyst Recruiting Out of Control thread:
I think it will continue moving up until the next recession. Firms will cut back on their offers that are more than a year out from their start dates. The economy will recover and they will recruit again closer to the start dates.
I thought this was a cool way to look at explaining why summer recruiting is happening the way it is and wanted to hear your thoughts on it. Critics of this synopsis?
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