Cooperate or Defect: Introduction (Part I)

Let’s assume you are starting a new project with your another colleague with whom you have not worked before or have worked before but still unsure about the “trustworthiness” factor.   In other words, room for uncertainty:

  1. Will he play nice and cooperate?
  2. Will he defect and maximize his own satisfaction at your cost?

Given the uncertainty, what should be your strategy:

  1. Should you defect, since in the short-run you might have potentially larger payoff?
  2. Should you cooperate for smaller pay-off in the short-run since you might percieve this as ethically better choice?

Furthermore, let’s assume, you cooperate the first time around and the other person  defects. In that case:

  1. Will you go into massive retaliation and swear never to work with that person again?
  2. Will you let go this time and in the next  engagement, you will defect, so you can teach him a lesson that if he can defect, you can defect to?

Right Strategy

I will first state the “right” answers and then develop the reasoning behind it in the subsequent posts.  According to Game Theory, in Prisoner Dilemma (PD) type scenarios (beware of pseudo-PD’s), the right approach is the following:

  • Always cooperate
  • If the other party defects , follow the “tit-for-tat” strategy. You defect the next time, and this will lead to cooperation from the other party in subsequent engagement, leading to preferable cooperate-cooperate scenario for all future engagements.

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