The Prisoner's Dilemma is a situation in which two parties need to choose whether to cooperate. If both of them choose to work together the outcome is significantly better than if they choose not to. However, if one party cooperates while the other does not, the selfish party receives the best outcome; such as one prisoner betraying his accomplice in return for immunity from prosecution.
While theoretical, the Prisoner's Dilemma represents many of life's situations. For example, consider natural resource consumption. Even if everyone cooperates and shares equally, a selfish party can derive the greatest benefit by exceeding their allocated share. However, if all parties act selfishly, the ecosystem will likely collapse and everyone will be poorer off. Fisheries management is but one case.
Similarly, the Prisoner's Dilemma can be applied to office politics. This often involves leaders jockeying for limited influence, visibility, or budgets. While the greatest value can be created if executives selflessly cooperate – and focus on the good of the organisation – one bad actor can benefit by being selfish.
This is why even in the most enlightened organisations – and sometimes particularly in these organisations – you find toxic managers who will steal credit, bully employees, and mislead executives. Paradoxically, often the healthier the organisation, the bigger the payoff if you are one of the few bad actors. Yet imagine if everyone were to behave this way: the culture would be ruined.
So, how to manage such a situation? In other words, how can you resolve the Prisoner's Dilemma? Assuming a sequence of scenarios, or games, starting out in good faith is a proven solution. If the other party cooperates as well, you will then cooperate in the following round. This will lead to ongoing collaboration.
However, if your cooperation is not reciprocated the first time, you must withhold cooperation in the second round. If the other party "learn their lesson" and decide to cooperate in the third round, you can then switch back to cooperation in the fourth round. Should they always refuse to cooperate, you keep doing the same. At each step, you mirror the other's previous action.
So how does this translate to organisations? Whatever the situation – be it one of budget, credit, or culture – always start by extending the hand of friendship and open collaboration. As they say: say what you mean, mean what you say, and don't be mean. In most healthy organisations, this collaboration will be reciprocated by the majority, leading to the greatest benefit for everyone.
However, when you encounter a bad actor – irrespective of whether they are led by malice or myopia – you immediately withdraw your cooperation until they change their behaviour. It is by their actions you should judge them as words are cheap and often used to forestall punishment. Should they keep acting in bad faith, they should remain isolated, lest they be rewarded for their toxic behaviour.
Applying this approach across the organisation leads to an equilibrium where everyone effectively collaborates, except for those few bad actors who are universally recognised and ostracised appropriately. This clarity allows an executive team to make the required leadership changes to improve the culture.
While game theory and the Prisoner's Dilemma might sound abstract and far removed from our day to day lives, when it comes to building a culture of collaboration it is an effective cognitive tool. After all, no matter our line of work, as in any game we each need to decide what actions to take on a daily basis. The more we incentivise cooperation, the more likely we are to win together.
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