A Game Theory Power Play — UK Style!

I often use game theory and the prisoner’s dilemma in my talks to share the advantages and disadvantages of cooperation. In the prisoner’s dilemma  “players” are not in the same room and are unable to negotiate and have to make choices on whether to cooperate or not based on rewards.

There are three simple outcomes. Win-Win (both parties cooperate and win something), Lose-Lose (both parties do not cooperate and they both lose), or win-lose (where someone wins and the other loses).

Unfortunately, most business relationships today fall into the win-lose category.  I think of these relationships as a virtual Ping-Pong match because the parties go back and forth—sometimes winning and sometimes loosing.   In the process, both parties lose trust. This is a vicious cycle because things are not bad enough to call it quits, but it is far from productive.

Business Insider’s Joe Weisenthal shared what he called a “badass display” of Game Theory from a contestant on the popular British game show known as Golden Balls.

In this game, a variation on the classic prisoner’s dilemma, two men must face each other and determine how and if to trust each other with a pot of 13,600 pounds ($21,564) at stake. They each have two balls, one that says “split” and one that says “steal.” If they both split, they share the prize; if one steals and the other splits, the stealer takes the entire pot; if they both steal they go home with nothing.

Watch the entertaining video to see how it played out:

The dynamic is different in Golden Balls because the players are sitting opposite of each other and are able to negotiate. As the host says this was an ultimate test of faith, trust and greed.

Nick, in a friendly but muscular and somewhat devious way, controlled the action by insisting all along to Abraham he would steal the pot, but then promising that he would split it with Abraham so long as he agreed to choose the “split” ball.

It was an interesting game of cat and mouse from Nick that prevented Abraham from opting to steal the pot. By his action, Nick virtually guaranteed that the pot would be split.

Game theory teaches us that when parties in a non-cooperative situation decide to cooperate they will always win. This is a foundation of the Vested approach, where cooperation, trust and collaboration are necessary conditions for the win-win.

In the video, Nick clearly demonstrates the inefficiency and anxiety that can happen when there is not trust. With trust, the parties could have had a stress-free decision in a fraction of the time it took Nick and Abraham to get to the same outcome. So next time you are sitting at the negotiating table – pull out this video of Nick and Abraham and show it to the negotiations team and ask, “Are we building trust or are we playing cat and mouse?”

You might end up with the same results; but playing conventional cat and mouse negotiation games will definitely increase your anxiety level and erode trust.

What kind of way is that to operate a business relationship?

Speak Your Mind