I am reading a book called “Games Indians Play” written by V.Raghunathan. It tries to explain the way Indians are using concepts from Game Theory. I have been fascinated with this subject ever since I read the biography of John Nash called “The Beautiful Mind”. Many of you might have watched the movie, but the book is richer and closer to life.
Game Theory was initially developed to understand economic behavior. Early game theory dealt with non-cooperative games called zero sum games. Typically two people A and B trying to win a match. If A wins it means B looses and vice versa and there is no advantage in collaboration. TCS winning a contract would mean Infosys loosing it. What is the best strategy TCS can evolve to ensure Infosys loses. Such scenarios can be evaluated and studied in game theory using zero-sum.
It was John Nash who focused his attention on Non-Zero-Sum games, situations in which there is some advantage in collaboration too. The most famous example of a non-zero-sum game is what is termed as Prisoners Dilemma. The problem statement is as follows
Two people Ram and Sam have been caught for a crime they committed together. They are being interrogated in separate cells. The interrogator tells Ram that they have enough evidence to prove the crime against both of them and they can be sent to jail for 2 years for this crime. If Ram owns up to the crime and exposes his partner then he will be let off with just 4 months in prison whereas Sam will get 4 years. He also tells that Sam is being given the same deal. Ram asks what happens if both them own up to the crime and expose the other person. The interrogator says, both will get a term of 4 years. What is the best option for Ram?
1) If neither Ram nor Sam expose each other then both get 2 years.
2) If Ram does not expose Sam but Sam exposes Ram then he will end up with 4 years in Jail
3) If Ram exposes Sam but Sam doesn’t then he can be let off with 4 months and Sam gets 4 years
4) If both of them expose each other, both get 4 years.
Both Ram and Sam have no way of communicating to each other, so the most likely thing to happen is Scenario # 4 – Both Ram and Sam expose each other and land in jail for 4 years. But if you stop to observe the best option for both would have been not to expose each other. They could have both got off with just 2 years each.
Scenario #1 is what we call win-win situation. How often do we strive for it in life? How often we lose out because we fail to recognize the value of collaboration!!!