The Prisoner’s Dilemma

There is a thought experiment called the Prisoner’s Dilemma. In the test, two prisoners are brought in by the police and sequestered in separate interrogation rooms. The detective comes into each room and under a bright light leans in, so close that you can taste the coffee and nicotine on his breath.

A detective gives the hard sell to your neighbour

You are one of these prisoners; your neighbour is the other. As he coughs to let you know that he doesn’t care about your comfort, he calmly and with great control says, “We’ve got your neighbour in the next room. It’s only a matter of time before he confesses, so if you rat your neighbour out before they point the finger at you, we’ll let you go.

You are either innocent or so good at crime; the only thing that could send you to jail would be your neighbour and partner in crime, turning you in. You know that if you both turn each other in, you’ll both end up going to jail for ten years. If only one of you rats out the other, the person who gets turned in is getting twenty years, and the other gets five. However, if you are both able to stay loyal, then you both go free.

So what do you do? If you elect to pursue no jail time, you have the option of staying loyal or ratting out your neighbour. Of course, if you rat out your neighbour, then you are admitting to the crime and will get either five or ten years in prison depending on whether or not your neighbour rats you out. You are putting a lot of trust in your neighbour to stay loyal. Remember, if you opt to play dumb and your neighbour squeals your doing twenty years.

This method of interrogation is a tactic frequently used by police officers who have strong suspicions, or not quite enough evidence to charge. Due to our proclivity to be loss averse most instances of this dilemma ends with the two prisoners going to jail for ten years. Mental stress, coupled with the distrust that we have for our neighbours causes us to yield for the path of secure loss. Sure you’re going to jail for either five or ten years, but you are A) not going alone and B) at least in control of that decision.

When it comes to trusting others to have our best interests in mind, we more often than not will choose self-preservation. Even if that means turning down the opportunity for a mutual win.

Game Theory

Game Theory is an emerging way of understanding the world and the interactions within it. In 1917 on Christmas the Germans and Allied forces put their guns down and had probably the most visceral example of humanity that most people can think of. But why? We learned from the Prisoner’s Dilemma that we are all more likely to choose moderate and mutual suffering than risking possible individual loss. Those first few steps that the brave soldiers from both sides took from the trenches were exactly what Game Theorists research. Each decision to step forward was a choice between 4 scenarios:

  1. Allied Side Shoots German Dies (Zero-Sum)
  2. German Shoots, Allied Soldier Dies (Zero-Sum)
  3. Both Shoot, Both Die (Zero-Zero)
  4. Noone Shoots, they play soccer (win-win)

    Game Theory teaches us why we are always guns ready.

Three of those four scenarios end in death. So the courage required to choose option number 4 is incredible. Interactions between people, businesses, countries and governments always follow this kind of formula. There are two scenarios where one side can win, and the other loses. One where both lose or does not gain and one where both parties can win.

Think about buying a car. You are committing a large amount of money to purchase a vehicle. This money is a win for the dealership and salesman, as they can pay off the overhead costs of the car, the salesman and other fees and then some profit. If you are happy with your vehicle, it will get you to your job, a family vacation, even save your life. Ultimately, if the dealer is honest and sells you an excellent vehicle at a fair price, it is a win-win. If you get a lemon and the dealer doesn’t honour the warranty or mislead you into buying the wrong vehicle for your lifestyle, then it becomes a Zero-sum equation.

Because as detailed above the four outcomes from interpersonal interactions contain three zero-sum results, we have begun to see all scenarios as Zero-Sum. With this in mind, we always shoot, we always rat out our neighbour, and we still mistrust car salespeople. Although the last maybe a bit more earned than my other examples.

If nothing else, take some time and go through the following exercise. It helps explain why we are always so quick to screw each other and why we think we are doing the right thing when we do it.

Game Theory Explained – Why We Screw Each Other Over

In a Community

The basis of our economy is a reasonable sense of trust. Trust that our paper/digital money is good for the exchange of goods and services. Trust that our governments and those who are in charge of our safety and well being are upstanding people, who are not going to choose a zero-sum result. But when it comes to ourselves, we do not hold ourselves to this same standard.

In small towns, wins for some are viewed with scrutiny and suspicion because of our 75% default to assume a zero-sum result.

In Malcolm Gladwell’s new book, Talking to Strangers, he details the story of the Ponzi Scheme of Bernie Madoff. Over 50 Billion in misappropriated funds disappeared in the most massive Ponzi scheme in history. There was one man who saw this scheme for 20 years because he defaults to suspicion and mistrust. At the end of the chapter, Gladwell describes the whistleblower cloistered in his home armed to the teeth awaiting a government incursion that will never come. Although the whistleblower was right, and has money, this precondition of scrutiny has him living like a hermit, paranoid and armed to the teeth.

Thriving communities and companies instil a belief in win-win scenarios. If you want your town to turn around, it requires an understanding that an investment made in one place, will have benefits that spread out to the entire community. These payoffs are not always equal, but in some games, even avoiding loss can be viewed as a net gain.

For businesses, Simon Sinek’s theory of the “Why” comes back into view. The most successful companies deliver products or services that not only work well but once they are in the hands of the end-user, begin to say something about that particular user. If you buy the new iPhone this week, you are not doing so because last year’s model no longer provides you value. You are buying it because of who you are. So in the game theory understanding for the interaction between you and Apple, it would look like this:

  1. You don’t buy the new iPhone (Apple Loses / You don’t lose)
  2. You buy the iPhone but hate it (Apple Wins / You lose)
  3. You buy the iPhone and Love it ( Apple Wins and You Win)
  4. You buy the iPhone, and it’s just ok (Apple doesn’t lose / You Neither Win or Lose)

You can easily see from the list above, that Apple receives the most benefit from both parties winning. The long term ramifications of having a customer believe in your product or service are significant. This example is similar to the scenario faced by community leaders. As long as service delivery is excellent, and the actions taken by the organization in question are consistent with the “Why,” companies and communities can count on continued support. But most importantly, they can count on acceptance and forgiveness when mistakes, miscommunications and failures occur. The iPhone SE was an insult.

Family Vs Family

Ok, this has been a long blog post, but it was, in my opinion, necessary. Because now I am going to ask you to examine how you make decisions about your neighbours.

In Canada, we have many social programs designed to help and aid our most vulnerable. If you take away all of the personalities out of politics, no leaders, no colours, your understanding of these systems is how you will play the game of life in Canada. It will govern how you interact with the electoral process (who you vote for), and how supportive you are of your neighbours with your time and money.

Social Programs

Universal Health Care is a socialist system with which most Canadians agree. Partly because an illness is a great equalizer. Rich or poor, black or white, or brown, male or female, we all get sick, and we will all die. We are willing to pay into this universal system because as a society, we know the value of an eventual payout. And that it is worth the small contributions that we make throughout our lifetime as taxpayers. This game has the following outcomes:

  1. You pay into the health care system and don’t ever use it to the value of your input
  2. You pay into the health care system and use more than you put into the system
  3. You pay into the health care system and use the same amount as you put in
  4. You don’t pay into the health care system and use it
  5. You don’t pay into the health care system and don’t use it

As you can see from the possible outcomes, there are two options where you are not putting any value into the system. The difference in this scenario is that by law, not paying for the health care system can only occur when you are not paying taxes. If you are not paying taxes, it is because you belong to a group that the social safety net is designed to catch. The rest of us pay eleven cents of every tax dollar into the Health Care a pot. Some provinces this number increases but this is the national average from 2017.

Doctor examining a child

This game plays out across all social programs. Whether it’s welfare, government subsidies, garbage pick up or anything that a government delivers. The game is always in motion. The question of where we place our vote has more to do with our feelings about the game. If you believe that the system is screwing you, you’re more than likely a conservative. If you think that people and companies are screwing the system, you’re more than likely a progressive.

No one is 100% right or 100% wrong here. The real culprit, driving wedges in our communities, provinces, country and world, is that each side believes that the game is rigged for the other. Rich people view the people who extract more value from the system than they offer as leaches, even though this level of care allows them to create the wealth they have. People on the other end of the spectrum see the wealthy as tax cheats, not paying their fair share. But in this case, we lose sight of the game. We need to realize that over-taxation of a certain level of wealth removes the incentive for people to play the game in good faith. Once that level has been reached, we see tax evasion become an epidemic that can cripple an economy.

Screw Your Neighbour

If you played the game from the Evolution of Trust, found in the link above, you’re beginning to understand why it is critical for people in a community and economy, to act in good faith. Repeated losses for one participant of the game can sour them against playing in it, or believing that good things can come from playing it. So the result is that when forced to play the game, they contribute as little as required. They pay taxes because it’s required by law, but they will find ways around how much they pay. On the one hand, you have people who view the game as corrupt and those benefiting from it as thieves. Resulting in a scenario where any success in the community is met with hostility and suspicion and support will be withheld, even acts of sabotage can occur.

The vilification of our neighbour, and by the way if you live in a rural community, we are all neighbours emerges from this misunderstanding of the game and our actions within it. This pattern of behaviour central to the decay of our institutions and communities.

Yes, sometimes it sucks to see your neighbour win every day while you are standing still. But according to game theory, their success could be the reason that you are not losing. It is tough to maintain an optimistic approach to the game when you are consistently met with other players who cheat or withhold their contributions out of anger and spite. What these players, who routinely hold back and don’t contribute fail to realize is, that if they were to eliminate those who push for more to be put into the game, (i.e. taxes and investments in the community or company), then the game would cease to produce any result other than a lose/lose or draw/draw.

The trick to being a good neighbour is trying to maximize the occurrence of win/draw or win/win scenarios. The Win/Draw scenario is the most challenging theory for most to wrap their head around. The player who draws in this scenario, more often than not views it as a loss. This viewpoint is rarely, if ever true. Life is not inherently zero-sum. The game’s payoffs are rarely, if ever, immediate. A perceived draw can turn into long term wins. A new restaurant opening up and succeeding, can make money for your neighbour who owns it. But the longterm benefit to you might provide value that outweighs the margins the proprietor is making. Restaurants are a hard way to make a profit.

In Summation

Game theory has an unfortunate name. It trivializes what can be an enlightening worldview. The game is infinite. It has been here long before we had a name for it and will be here long after we’ve forgotten it.

Since the beginning of man’s ability to problem solve, we have had to weigh the benefits of cooperation vs self-interest. The truth is that there is and will never be one singular way to play the game of life. In a community, you sometimes have to accept a draw or small loss for the benefit of the many. But when those losses continue to pile, you become resentful and believe you would be better off on your own. On your own, you no longer have to carry the weight of anyone else; however, no one is carrying any of your weight when you need it. There is a balance to be sought after, between the two. As the world moves further and further apart and closer to fundamentalism and unequivocal loyalty to that fundamentalism, it is hard to see a scenario where this game produces many if any winners.

So let’s go back to the interrogation room. The detective has made you the offer. You are unsure about what your neighbour is going to do with the same offer. What do you do? The only way to win is to trust your neighbour and hope that your neighbour does the same. So in this day and age, is that trust strong enough to rely on each other. Or do you cut your losses and betray the possible trust of your neighbour and suffer a little to minimize your losses?

It isn’t an easy question to answer, and the numbers show that people grapple long and hard with the implications, guilt or innocence is irrelevant. But when we introduce the fact that you know the person in the other room, then we all think back to the quality of the relationship that we have with this person. Do we get along? Have I wronged them in the past? Every little imperfection, awkward silence, unintended fart gets immediately brought to mind. The trend that emerges is that we are far more likely to punish and continue to punish perceived slights than we are to reward neutral acts or acts that were beneficial to us.

Sadly, eventually, most people come to the same choice, which is mutually assured destruction, and they both end up in prison for ten years. It all comes down to how we approach the game of life. Do we assume everyone has selfish intentions and cheat to match, do we believe everyone is kind and always play fair?

The answer is not straightforward because both approaches can lead to failure; the best rationale that we can come up with is tit for tat with understanding. In the game above CopyKitty, a more forgiving version of the tit-for-tat model forgives the first slight and will only retaliate after two consecutive slights. A forgiving tit-for-tat approach would view the prisoner’s dilemma and ask themselves, “Can I explain those slights away? And did I lose when my neighbour won? Or, did I feel like I lost?” This approach leads to a significant increase in the ability of the two neighbours to escape the Prisoner’s Dilemma. And maybe it can help all of us do better in the dilemmas we all face every day.


Thanks for reading.


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