Optimal for “me” may not be Optimal for “us”

Two criminals are apprehended by the police, suspected of armed robbery. Call them Alice and Bob. (Hey, women can be armed robbers as well!). Being hardened criminals, it is difficult to get a confession out of them. And we have hardly any other evidence to convict in an absence of an explicit confession.

Now the cop is a clever guy. He goes up to both the suspects and offers them the following deal:

  • If you both stay silent, you get 1 year in jail each.
  • If one of you stays silent and the other one betrays the silent person, the betrayer goes free and the betrayed gets 3 years in jail.
  • If both of you betray each other, both of you get 2 years in jail.

He then separates them and leaves them to think through their options for the night.

Alice thinks that – assuming that Bob Betrays – if she stays silent she gets 3 years. If she betrays she gets only 2 years in jail. Assuming that Bob Stays silent, If she stays silent as well, she gets one year in jail, whereas if she betrays, she goes home free. So in both cases, she is better off betraying Bob.

On the other hand, Bob’s thinking is also identical. He will also be better off betraying in all cases, irrespective of Alice’s behaviour.

So, being perfectly rational, they both betray each other and get 2 years in Jail each.

Take a moment thinking about this. As a group, the most beneficial outcome would have been that both stayed silent, getting one year in jail each. However, in ignorance of the other’s choice, the group settles for 2 years in Jail each.

The decision that the individuals took is the most optimal for them but is suboptimal for the group as a whole. This is the classic “Prisoner’s Dilemma”. This strategy (The Dominant Strategy) is the famous Nash Equilibrium, by John Nash. There is an excellent movie based on his life, “A beautiful Mind”, which you should watch. John Nash got a Nobel for his work on Game Theory, the field which deals with decision making under uncertainty.

Unfortunately, this is not far-fetched in the business world. We often have people working within the same organisation operate in conflict with one another.

Uncooperative behaviour can be further seen when unreasonable expectations, aggressive deadlines and inadequate measurement criteria cause undue stress and competition. Stress brings out the win-lose psyche in people and we’ve all seen this play out at work.

If this isn’t bad enough, local optimisations with complete disregard to any impact that such actions may have on other areas of the business cause the nastiest forms of such behaviour. Sales people selling products/services that their firm’s operations staff can’t produce or provide is a classic example of this in action.

Regardless of the cause, uncooperative conduct hinders an organisation’s performance. In fact, a steady diet of it leads to lingering, sub-optimal results – the consequences of which can be disastrous to the long-term health and prosperity of the enterprise.

Clearly, we as leaders must sniff this out and take the necessary steps to eradicate the behaviour.

We can do this by:

  • Being very clear and deliberate with our direction-setting;
  • Establishing appropriate expectations, deadlines and goals;
  • Aligning measurements and rewards with expected results;
  • Stressing “team” over “individual” performance, and;
  • Raising awareness and providing appropriate training, as needed.

In this way, we can reset our organisation’s group dynamics in a direction that enables success and help it avoid falling victim to the prisoner’s dilemma.

Ref:  http://www.management-issues.com/opinion/6648/the-prisoners-dilemma/


This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s