Business Development Consultant - I help B2B companies build and implement sales strategies that actually work
People no longer trust each other. Why is that and how can we fix it? #NowYouKnow 5/52 How does "game theory" sound to you? Childish, right? Well even if the branding isn't very good, this is a common concept encountered in economics, in the business world, and even in everyday life. Today, we only focus on one concept from game theory: The Prisoner's Dilemma. The theory is quite simple. Let's say a small-scale robbery occurred, and there are 2 suspects: Jack and Jim. The police believe that the crime was more serious but they don't have enough evidence, so they need the testimony of one of the suspects. The culprits are interrogated in separate rooms, and neither of them knows what was discussed with the other. The officer proposes the following deal to each one: If one testifies against the other, then he is released, and the other receives 5 years in prison. (5 years in total) If neither confesses, both receive 1 year each. (2 years in total) And if both confess against each other, each one receives 3 years in prison. (6 years in total) If Jack and Jim were familiar with the prisoner's dilemma, they would know that the best solution is to cooperate, that is, to remain silent. This way the team would spend only 2 years in prison versus 5 or 6 years in the other situations. Unfortunately, this concept is counterintuitive for those unfamiliar with it. That's why it's called a "dilemma." Because people will always put themselves first, choosing to betray to save themselves. However, in the end, both will suffer. This may seem like a relatively simple and strictly theoretical concept, but in reality, it applies in any situation where: - There are 2 "players" - Both players can cooperate or betray - Neither knows what choice the other will make For example: In military conflicts. There are two countries. Both can decide to cooperate or betray in a war. Neither can be sure what the other will do. In nature. Plants provide nectar, and in return, insects pollinate them. As long as the two species cooperate, things go well. If one decides to betray, both suffer. Among business competitors. If Coca-Cola lowers prices to gain more market share, then Pepsi will do the same to avoid falling behind. But in the end, both companies will have reduced profits. Now, imagine how it is when you have multiple prisoner's dilemmas, one after another. But we can discuss that another time :) P.S.: If you want to test the prisoner's dilemma yourself, below there is a free online game that perfectly exemplifies it, with all its variations. If want to have a gig during your coffee break, check it out. https://ncase.me/trust/ Good luck in cooperating, Vlad
