Why "An Eye for an Eye" Might Be the Best Survival Strategy

Hey Friends,

Collaboration is essential in various settings, be it the workplace, school, or society. However, we often find ourselves taken advantage of by others for their own self-interest. So, how do we maximize our returns in these situations?

Enter Robert Axelrod, a renowned political scientist and game theorist who conducted the "Iterated Prisoner's Dilemma tournament" in the early 1980s. This experiment aimed to understand the best strategy for maximizing one's own payoff in repeated interactions.

What’s a iterated prisoner dilemma?

The Iterated Prisoner's Dilemma is a game that helps us understand how people make decisions when they're working together. It's like a game of "trust" - imagine you and a friend have to decide whether to work together or not. If you both work together, you both get a prize. But if one of you decides to cheat, they get a bigger prize, and the other person gets nothing. And if you both cheat, you both get a small prize.

Now, imagine you have to play this game over and over again with the same person. You start to develop a reputation based on whether you've been trustworthy in the past. This is what the "iterated" part of the game means - you get to keep playing and building up your reputation.

The reason this game is so interesting is that it shows us how difficult it can be to balance our own self-interest with the benefits of working together. In the game, it's often tempting to cheat and take the bigger prize, but that can damage your reputation and make it harder to work with others in the future. On the other hand, working together can lead to bigger rewards in the long run.

And just like in real life, businesses have to make these kinds of decisions all the time. Do we work together with another company and build trust, or do we try to cheat and get a short-term advantage? It's a delicate balance, and the game helps us understand the importance of trust and reputation in building successful long-term partnerships.

How’s the experiment conducted and what’s the result?

Robert invited experts from various fields, including mathematics, politics, and computer science, to participate in the Iterated Prisoner's Dilemma tournament with their best strategies. The results were simulated using a computer. The surprising result was that the strategy that performed the best was the simple "tit for tat" strategy developed by the Canadian Mathematician Anatol Rapoport, which involved starting with cooperation and then mirroring the partner's previous move in each subsequent round. (In fact, we shouldn’t even credit to Rapoport as this appear to be a simple ancient wisdom of “an eye for an eye”. )

The strategy starts with cooperation and continues to cooperate as long as the opponent also cooperates. If the opponent betrays, the strategy will betray in the next round. If the opponent cooperates after being punished for betrayal, the strategy will also cooperate in the next round. This way, the strategy responds in kind to the opponent's moves, but also gives the opponent the opportunity to return to cooperation.

Here's a table to illustrate the expected behaviour for the "tit for tat" strategy:

Why is the Tit-for-Tat strategy so simple but so successful?

The Tit for Tat strategy is successful because it combines four essential properties: being nice, retaliatory, forgiving, and transparent.

1. Being nice means cooperating as long as the other player does, which helps avoid unnecessary conflict, maximising the return when both sides are collaborative.
2. Being retaliatory means fighting back in the face of an uncalled-for defection by the other, which deters your opponents from continuously betraying as it will do no good to him as well.
3. Being forgiving means forgiving and going back to cooperating after your opponent decided to stop his betray and switch back to collaboration. If we don't forgive and continue to hold grudges, it can lead to a cycle of revenge and retaliation, which ultimately harms all parties involved.
4. Being transparent means being clear about your behavior so that the other player can adapt to your pattern of action, which helps build trust and understanding between the players.

These four properties work together to create a simple but effective strategy that maximizes returns in situations where collaboration is essential.

How can we apply to real life in business?

In the workplace, the "tit for tat" strategy can be applied by establishing a long-term cooperative relationship with colleagues. This involves being predictable and having a stable and behavioral expectation from others. On the other hand, you should release goodwill first, but if others do something wrong to you, you should dare to defend your rights and fight for the organization you represent. Finally, if they are willing to behave in the proper way, choose to forgive them and continue the collaboration.

For instance, if you represent the marketing department and collaborate with a sales team to jointly develop a sales channel, it is important to openly share your budget and usage with your sales colleagues (to be nice the beginning). However, if you find out that the sales team lead has secretly used part of the promotional budget you provided to fulfil their own KPIs, it is important to defend you and your team.In this case, the wrong way to deal with it is to silently provide more budget to help the sales team fill the gap.

In reverse, you should apply the “tit-for-tat” strategy by immediately issue a warning and cut the sales team's budget. If the team quickly acknowledges and corrects its mistakes, then you can re-evaluate whether to give the remaining budget to them from the perspective of maximizing your own interests.

As a leader in the workplace, it's important to have the courage to fight back and defend your team's interests. This not only establishes trust and respect among team members, but it also sends the message that you are principled and responsible. However, finding the right balance between being cooperative and standing up for yourself and your team is crucial. If you're too easy-going and always willing to compromise, you risk being taken advantage of and not being taken seriously. On the other hand, if you're too aggressive and always fighting back, it can lead to a cycle of revenge and violence.

Remember, as a leader, you have the power to establish a positive work environment by finding the balance between being principled and responsible while also being cooperative and willing to compromise, so embrace this challenge and lead your team to success!

Things that I found interesting this week:

📚 Book — “The Evolution of Cooperation” by Robert Axelrod

I recommend this book to you since I know you might be interested in decision making, collaboration, and game theory. The Evolution of Collaboration by Robert Axelrod has been cited extensively in the field of social science and beyond. The book explores the game theory behind cooperation and competition, and how collaboration can lead to better outcomes in both the short and long term. I wrote this article based on the research Axelrod conducted in the book, but the book offers even more details of how the experiments were conducted and more real-life implications for the lessons learned. If you're interested in learning more about how people work together and how to make better decisions, this book is definitely worth a read.

🎬  Video — Top 8 ChatGPT Productivity Tips for Work! by Jeff Su

I came across this really cool video on boosting productivity at work and I want to share it with you, my awesome friend! Jeff Su, the YouTuber, has worked on creating some of the greatest videos related to productivity, and this one is no exception. The video emphasizes that while we all talk about ChatGPT, the quality of prompt is what really matters in boosting productivity. With 8 practical and easy-to-follow tips, Jeff Su explains how to optimize your ChatGPT usage and improve your productivity. I particularly liked his tone and ways of explaining things; they were great!

📃 Blog — Why AI Will Save the World | Andreessen Horowitz (a16z.com)

I found this article pretty inspiring to me as it highlights how AI can be used to solve some of the world's most pressing problems. A lot of the leaders in Tech including Elon Musk, Sam Altman has raised concerns about the raise of AI, while this blog post written by Marc Andreessen, the co-founder of Andreessen Horowitz, shared a pretty positive view on the future of AI application.  I found his Baptists And Bootleggers theory on explaining the fear to AI particularly interesting.