Game theory X Life

The prisoner's dilemma is a standard example of a game analyzed in game theory that shows why two completely rational individuals might not cooperate, even if it appears that it is in their best interests to do so.

Although the ideal condition—the win-win situation— is the one where both of you choose to stay silent, yet the most rational thing to do is to snitch because by doing so, you are trusting a stranger who is also a criminal to stay silent as well when he has a clear opportunity to gain a lot—walk out free.

In low-trust societies, and when you factor in loss aversion, people might take a poorer deal. In real-world terms, this is why we often see situations where everyone ends up worse off because no one trusts the system or each other enough to cooperate.

But prisoner’s dilemma, when repeated over multiple games, led to cooperation being the best strategy over a longer term.

This is how societies function, based on implicit trust.

Start your game with (Given/Implicit) Trust but keep the game strategy going with (Earned) Trust.

1. Being nice 2. Being forgiving 3. But also being retaliatory ( thus not taken advantage of) 4. Being clear

The most thought-provoking takeaways “Most of life is not zero-sum” and in the “short term the environment shapes the player, but in the long term the players shape the environment"

More in this video here that sums it up.