The Game Theory of Recruiting
George Carollo
Co-founder
July 28, 2025
•
4 min
Both recruiters and founders try to minimize investment and diversify to mitigate risk.
Recruiters juggle several clients at a time. Every founder claims hiring urgency, but recruiters know that only a small fraction will actually make hires via their efforts. Recruiters try to minimize investment (30–50 hours per search) since they know that most searches won’t work out.
Founders spin up multiple recruiters and often “ghost” them. Founders engage multiple recruiters and keep recruiting themselves for the open position. Once priorities shift, companies will often stop responding to recruiters.
Myopic behavior dominates. With no trust and no expectation of future cooperation, the equilibrium is inefficient: high fees, low trust, wasted time for both founders and recruiters.
The simplest way to escape this low‑trust equilibrium is to turn a one‑shot game into a repeated game. Big companies do this by hiring recruiters full‑time. With an ongoing employment relationship, both sides expect many future interactions. The founder shares full context because the recruiter is now part of the team; the recruiter invests deeply in the employer’s brand because their livelihood depends on sustained performance. In game‑theoretic terms, the repeated interaction shifts the equilibrium to the cooperate–cooperate scenario. As a result, the costs of hiring drop massively.
A full‑time recruiter costs around $10k to $20k per month. Hiring a recruiter locks companies into another employee, regardless of actual hiring needs. Startups with sporadic hiring can’t justify that overhead, yet sticking with pure contingency keeps them stuck in the defect–defect equilibrium.
Dover Aligns Incentives for All Companies
Dover re‑engineers the game’s payoff structure so that even a small startup can reach the high‑reward equilibrium without committing to a full‑time recruiter.
Public cost‑per‑hire data. Dover logs every hire publicly. Recruiters’ average cost per hire becomes common knowledge. Because their future business depends on these numbers, recruiters choose strategies that minimize cost: sharing candid feedback, refining specs early, and pivoting when a search stalls.
Minute‑by‑minute billing. Employers pay recruiters in Dover’s marketplace by the hour. This forces companies to reveal their intent: serious founders are happy to pay people to work for them while tire‑kickers self‑select out. Because recruiters on Dover’s marketplace bill hourly and there aren’t any long‑term contracts, startups retain full flexibility.
Cross‑account penalties. If a company is dissatisfied and “fires” a recruiter on Dover’s marketplace, that recruiter’s revenue shrinks across all their other Dover engagements. The threat of lost future earnings keeps recruiters honest and discourages them from taking on searches they can’t fill.
These mechanisms replicate the benefits of a repeated game, like trust, transparency and optimizing for the future, without requiring a full‑time hire. In equilibrium, both founders and recruiters have incentives to cooperate: founders provide clear specs and quick feedback; recruiters work efficiently and truthfully.
Dover’s marketplace data shows that most hires close between $2k and $8k, an order of magnitude cheaper than traditional agencies, while still preserving the flexibility of contingency recruiting.
Compounding Relationships, Not One‑Off Bets
Game theory teaches that outcomes depend on structure. In hiring, the default contingency model is a one‑shot Stag Hunt with predictable defection and high fees. Dover redesigns the game into a repeat interaction—through transparency, deposits, and aligned penalties—pushing both recruiters and founders into the cooperate–cooperate equilibrium.
