The corporate world can be difficult to navigate. Interdependency is central to game theory where your outcome is defined not only by your actions but also by the opponents’. Similarly, in a corporate setting, your success depends not only on your own decisions but also on the decisions of others — is crucial. Game theory provides a framework to navigate these complex situations
If you would like a TL;DR skip to the last section for a quick summary.
What is game theory?
Game theory is to strategy what english is to everyday communication. It provides concepts and common vocabulary to evaluate, dissect and understand strategical scenarios
In game theory, a “game” involves two or more players (which could be individuals, groups, or communities) interacting under certain rules, where the players are interdependent. This interdependency gives rise the popular definition of game theory
The subject of game theory are situations, where the result for a player does not only depend on his own decisions, but also on the behaviour of the other players.
It applies to situations where the outcome for a player depends not only on their own decisions but also on the behaviour of others.Having understood what game theory is, let us take a look at one of the popular games and what lessons can be learnt from it
What is prisoner’s dilemma?
One of the most well-known games in game theory is the Prisoner’s Dilemma. Prisoner’s Dilemma is a game that has two players at a moment and is assigned a strategy set.
Imagine a chest full of coins and each player gets assigned coins based on the strategy set. The goal of the players is to gather as many coins as they can from the chest.
Here are the rules of the strategy set:
- Each player can either choose to cooperate or deflect.
2. The different combinations we will run into in a 2 player game are the following — Player A (Down), Player B (Across).
Below is the Payoff Matrix — It shows what move each player can take and what they stand to gain from it.
How to read: If A deflects, and B cooperates, A gets 5 coins and B gets 0. Likewise, If both A and B cooperate, they each get 3 coins
What is the best strategy to optimise for maximum coins in prisoner’s dilemma?
So, what’s the best strategy to maximize points? The answer:
Be nice, retaliate if provoked, be forgiving, but don’t be a pushover
Dr Axelrod conducted an experiment in which world’s leading game theorists submitted programs to play against each other in a series of games, averaging 200 rounds in a single game (though the exact number wasn’t revealed). These programs fell into two categories:
- Nice strategies: Never initiated a defect and always cooperated until provoked.
- Nasty strategies: Initiated a defect independently.
Below, since A initiates the deflect, A is playing a nasty strategy
In scenarios where Player A initiates a defect, Player A is employing a nasty strategy. However, the “nice” strategies that retaliated when provoked, yet were willing to forgive and cooperate again, emerged victorious. This reinforces the strategy — Be nice, retaliate if provoked, be forgiving, but don’t be a pushover
How does this apply to the world we see outside?
Game theory isn’t just theoretical; it applies to real-world situations across biology, sociology, and economics. It can help us:
- Explain behavior
- Improve strategies
For instance, in the animal kingdom, cooperation often emerges over the long term to maximise mutual benefits. Wolves hunting in packs or birds flying in formation are natural illustrations of how cooperation can be beneficial.
How does this apply to the corporate world?
Game theory’s principles are especially valuable in the corporate world, since strategic interactions define success here. Understanding when to cooperate, when to retaliate, and when to forgive can be the difference between thriving and merely surviving.
Let us recall the lesson we learnt:
Be nice, retaliate if provoked, be forgiving but don’t be a pushover
Here’s how this can be applied in corporate settings:
Collaboration with a colleague gone wrong: Let’s say you and your co-worker are working on a project together. Although they put in equal effort initially(cooperate), they start slacking off(deflect) — Stop for a moment and think what you should do here based on what we have learned so far? The ideal way to move forward would be deflect which can take the form of having a conversation with your coworker on the benefits of working together. The beauty of this approach is that it doesn’t rely on trust; long-term cooperation leads to mutual benefits, encouraging continued collaboration.
Performance Reviews: I have worked in my share of toxic teams. To ensure good performance, you and your coworker can either focus on delivering your best work(cooperate) or undermine each other’s efforts (defect) to gain favor with your manager.If both of you cooperate, you’ll reap the rewards of your hard work and enjoy mental peace. However, if a colleague undermines your work, you can choose to address it directly or report it to a higher authority (defect when they defect). But remember, be forgiving when they acknowledge their mistake and return to cooperation. This approach also builds a reputation of integrity for you.
Managing Up: I’m sure we’ve all had to work with a difficult boss at least once in our lifetime. Suppose your manager steals credit for your work or refuses to acknowledge it (defects). Rather than enduring the toxicity and being a pushover, you can subtly deflect by increasing the visibility of your work so that credit cannot be stolen. But if your boss acknowledges your efforts and gives you the recognition you deserve (returns to cooperation), it’s best to respond positively and continue building that relationship.
Cross team collaborations: While working with other teams, our situation becomes very similar to that of animals in the animal kingdom. Although supporting each other in the short run might not reap benefits immediately, it is in the best interest of both the parties to continue working together (Cooperate). Then arises the question of “What if they do not reciprocate?” — In such a scenario, pull back by minimising the extent of the support offering but keeping the door open for further collaboration (Retaliate but be forgiving).
Conclusion: Bringing it all together
The corporate world, like in game theory, success depends on understanding behaviour and strategically responding to the actions of others. Here are the key takeaways:
- Be strategic with cooperation: Whether it’s dealing with colleagues or managing up, always approach situations with a strategic mindset. Cooperation is key, but don’t shy away from asserting yourself when necessary.
- Don’t be a pushover: Being nice doesn’t mean being a doormat. Stand your ground when others try to take advantage, but remain open to mending relationships when they show a willingness to cooperate.
- Calculated retaliation is good: Balancing cooperation with calculated retaliation and forgiveness can help you navigate the complexities of office dynamics and build stronger, more effective professional relationships.
Hope you enjoyed reading this article. If you would like to continue the conversation, you can reach out to me on sherliedurai@gmail.com
