More Thoughts on Win-Win Strategy

Continuing the discussion about Prisoner’s Dilemma, which leads to the win-win strategy of the 7 Habits course, I think further about the win-win. Basically, it is another application of the Game Theory.

In a zero-sum situation, it is pretty hard to find a win-win. The best is a compromise, since the resource is limited and fixed. The more you get is the more the other party loose.

The non-zero-sum game is more often in our life, but this fact is very easily ignore. Basically, it is about the total of someone’s gain, and others’ lose is not zero. It can easily become negative total or positive total. The best example for this is a couple: one won’t be happier if the other party is sadder.

That also echos to another simple observation of any trade: a trade has to be in a non-zero-sum environment. If the good I deliver is exactly the same in value as the good I receive, there is no reason to do it, since the transaction cost will cause the total value decrease. With trade, both party should get something better than what we give, from our own perspective. If we cannot reach it, then no-deal.

Many times, we encounter the problem of being angry, like a encountering a crazy driver on the road. In these circumstances, it seems making the other party feeling bad is the best way to make our self feeling good – we all know the result. Interestingly, why the idea of zero-sum is so dominate in our mind? In personal relationship, there is very few occasions that is a zero sum game.

The Reason to be Friendly – Part II

Continuing with the discussion I had yesterday, the key to the Prisoner’s Dilemma is the round of the game.

If there is only one round, it is obvious that everyone should simply choose X – since although you loose $1, it is better than being the only Y loosing $3.

If there is 10 round, except the last round, for the other 9 rounds, cooperate and having Y seems a good idea. Although by theory, there is no difference, but most people only think one step future (like this game).

If the game is running forever, or ending randomly, the best way to deal with it is always give Y. It is simply because, the others has the power to punish you if you choose to give X.

This is an interesting output from the game theory. When I relate it to all kinds of religions, it matches each other perfectly. In either Buddhism, or Christian, the story is, your life does not end as you die. There are life after that. By helping people to imagine the game is not over after you die, they artificially increased the round of the game. If my game is endless, the best way for my OWN interest is to play nicely with others.

Anatol Rapoport’s findings are so interesting. In an iterated prisoner’s dilemma, the best way to win highest personally is follow the following rules [src]:

1. Nice

2. Retaliating

3. Forgiving

4. Non-Envious

What an amazing conclusion it is that selfish people in an iterated prisoner’s dilemma tends to end up as nice, retailing, and non-envious?

That is maybe the cornerstone of how this human society works.

The Reason to be Friendly

I just finished the training of 7 habits of highly effective people of Right Management by facilitator Jessica Cao. To be short, it is a wonderful training and better than what I expected. The most impressive game in the training was the XY gambling game. That gives me the true strength about being friendly and doing the right thing, despite of other people’s behavior. Let me share the game with you.

The Prisoner’s Dilemma

The game is a famous example of game theory: the prisoner’s dilemma. I have read about it before, but never played it in real life. The actually result is shocking. The game is like this:

There are four teams.

Every team can choose to bet X, or Y at their wish.

The rule is like below:

If every team choose X, every team lose 1 dollar.

If every team choose Y, every team get 1 dollar.

If there are both team choosing X, and Y, every team with Y need to pay money to X.

3X – 1Y: Y loses $3, and every X gets $1

2X – 2Y: every Y loses $1, and every X gets $1

1X – 3Y: every Y loses $1, and X gets $3

There are 10 rounds.

It is obvious, that X is a better option than Y, since by choosing X, you always have a better winning chance than Y, but the problem is, for the 4 teams as a whole, the only win-win situation is everyone chooses Y.

The actual result was: our team continued to choose Y for 10 times – the crazy guys! and there is one team always choosing X, and other two teams turned from X to Y along the game. Interestingly enough, when the three Ys get the consensus that Y is the right thing for the group to do, they insist it, and the X also considered X is the best option for them to get money out of the pockets of other teams. Along the game, the facilitator changed doubled and even 20x of the winning/losing amount.

The result was: one team (us) looses $38. Another team looses $36, and another $28. The X team won $102.

The Choices

It is obvious to everyone that by choosing X (especially when everyone’s choice is Y), you get the immediate reward (money), but only when you at the game, you can feel the tension between the 3 Y team and the X team, and the increase in trust level amount the three Y teams. As the game continues, it is more and more clear to everyone that if there is a second day, the three Y teams will choose to play together, and leaving the X team alone.

Taking the goose and the golden egg example, X team is actually trading the future rewards for immediate return. People will choose to play with people they trust. That is how this society works.

Y is the Friendly but Vulnerable Bet

When you are not clear about what your players are, the safe bet is X (protective). Y is actually a friendly card. It shows to your partner that you are harmless, and you want to cooperate. That is vulnerable, but in real world, it often gets kind response.

By believing taking the initiative of being friendly, and be the first (and promise to be the last one) doing good thing, that is investing to the future of one’s life, and is actually the smartest thing to do, although it is seen as foolish in the early days.

Thanks Jessica for sharing the game.

P.S. Metro Line #7

Metro Line #7 of Shanghai Metro opens for trail operation today. I don’t have a chance to take a ride today, but will surely try it tomorrow. It only opens from 9:00 AM to 4:30 PM.

Yifan Loves to Sing

Yifan grows up quickly. Recently, he started to find a tune by himself, and created the lyric. He even gives his own first song a name: Ma Ni Ma.

That sounds like:

Ma ni ma ni ma ni ma ni la,

ma ni ma mi ma mi ma….

Whenever he is in good mood, his little song will fill every corner of the room. Amazing!