30 August 2009

Game Theory - Winners, Suckers, Rewards & Punishment

Highly relevant to sustainability, communications and any kind of social negotiation...

Excerpt from the School of Thinking

'WHAT IS SUCCESS?

There are two basic meanings of success:
1. You-Lose, and
2. I-Win.

You-Lose is the kind of success a boxer enjoys in a World Champion title fight. For him to win the title - be Champion of the World - and collect the purse he has to see that the other fighter fails to win. This kind of situation is called, by games theorists, a ‘zero sum’ game and is where success for one player means failure for the other...

I-Win is more like what happens in life itself. At home (whether in a relationship between lovers or families), or at school, or at work, I can be successful by playing I-Win without anyone having to lose or fail.

- I-Win can happen without my mate having to fail.
- I-Win can happen without my customer having to lose.
- I-Win can happen without my neighbour having to suffer...

Success in life consists of how well we manage the unfolding series of encounters with others. In each encounter we can cooperate and be NICE or we can defect and be NASTY. We see examples of those who always play NASTY, others who always use NICE and still others whose strategy is a mix of NICE and NASTY...

THE WINNER - AVOID THE TEMPTATION TO WIN
It’s the I-Win-You-Lose philosophy where for you to win the other loses; you beat the opponent, you conquer the adversary. “Greed is Good” is the motto of this strategy and in the Game it is the strategy where the other played NICE and you played NASTY.

THE SUCKER - WHY SUCKERS ALWAYS SUCK
The Sucker is the biggest loser of all in the Game. You become a Sucker when you play NICE and the other plays NASTY.

THE PUNISHMENT - ALWAYS PUNISH WINNERS
The Game always punishes winners. Whatever the outcome of today’s round there will always be future rounds to play and that’s where the Winners get punished. Because the game of life is unfolding it is a cybernetic or feedback loop.

HOW TO PUNISH WINNERS
Tit-for-tat means payback. The Dutch call it ‘dit vor dat’ and the French ‘tant pout tant’. Caesar called it ‘quid pro quo’. To Shylock it was a ‘pound of flesh’ and the Hebrews called it ‘an eye for an eye’. In the Game it is NASTY/NASTY.

HOW TO REWARD NICE GUYS
Tit-for-Tat is how you reward a nice guy. When he or she plays NICE you always play NICE. You NEVER play NASTY. You NEVER yield to the Temptation to Win the million. You build trust and you ALWAYS both succeed.

In both the Game and in real life this is the best strategy of all yet it is one which has a very poor reputation because it is so widely misunderstood. tit4tat is usually considered childish at best and uncharitable, even heartless, at worst. Yet it is the fairest strategy of all and, as it turns out, the most successful strategy in life and, therefore, the only one which qualifies as the #1 Law of Success.

In Game Theory, t4t or the tit4tat strategy is also called the NICE Strategy and has two basic rules:
1 Always play NICE first, then
2 Always match the other’s play thereafter.

• Always REWARD NICE tit4tat … (NICE/NICE)
• Always PUNISH NASTY tit4tat … (NASTY/NASTY)
• Always avoid the TEMPTATION to WIN … (NICE/NASTY)
• Always avoid the SUCKER’S PAYOFF… (NASTY/NICE)

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