Saturday, September 8, 2012

Game Theory and the Son's Dilemma

Game theory is the study of decisions that two sane individuals choose to make in relation to one another. These decisions confront each "player" with different dilemmas. A classic example is the prisoner's dilemma — a situation where the two players choose not to cooperate even though it's in their best interests to do so. Instead of cooperating, and both making a gain, one, or both, will choose to deceive the other — defecting from the partnership. If one defects, he makes a gain at the other's expense. If both defect, both loose. The prisoner's dilemma is a test of trust, each player will choose to cooperate as long as he trusts the other player to choose the same (and not defect). And herein lies the challenge.

The challenge, obviously, is maintaining that trust, a sense that is so painstakingly forged, yet so easily crushed — one foul move and everything you've worked so hard for is gone. When the trust is gone, defecting becomes an option, with each player defecting to "teach the other a lesson". In theory, if the game has a foreseen end to it, the optimal strategy for each player at that point is to always defect...

Does this sound familiar?

When I was playing the family business "game", I was faced with what I call the son's dilemma. In the game, you put your (blind) trust in your father, trusting that he will work with you. But every so often the father chooses to defect. It is at that point that you are confronted with the son's dilemma: trust your father again, or defect from the relationship, teaching him a lesson. If your father has defected numerously in the past, what would your turn be — trust or defect? How long would you continue this game?

For me, it was one defection too many, and trust was completely lost. The game was finally over.

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