Game Theory: Achieving Cooperation

Concepts for achieving cooperation through punishment


Last time we spoke about potential strategies to analyzing the Prisoner’s Dilemma game. However, most of these strategies contained certain flaws and were not sustainable in the long run. Today I am going to provide a framework of how to initiate successful punishments that will achieve cooperation. These frameworks come from the book The Art of Strategy  which I highly recommend to readers.

The first requirement is detection of cheating. This makes sense as before potential cheating can be punished, it must be detected. In addition, if detection is quick and accurate, the resulting punishment should be quick and accurate as well. You see this a lot in business like airline prices. As soon as one airline drops their price for a fare, a competing airline can do the some with quick turnaround due to monitoring capabilities.

The second requirement is the nature of punishment or choice of the punishment. In different scenarios, players have actions available to them that can be used to hurt others. In addition, in the long run, these actions can be great enough to erase all potential gains from those who cheated. One example that comes to mind is the SMU Football program in the 1980’s. Due to numerous NCAA infractions, the program was given the death penalty for many years. Even though the football program is back, they have not recovered since the punishment.

The third requirement is clarity. There must be clear boundaries of acceptable behavior as well as consequences. This should be clear for all players and potential cheaters. If there is a lack of clarity, there is a risk of players cheating by mistake. The fourth requirement is certainty. All players involved in the game must be confident that detection will be punished and cooperation is rewarded. Otherwise they will not have faith in the system and the potential for cheating will increase.

The fifth requirement is the size of the punishment. The question that needs to be asked is how harsh should the punishments be? This is a tough question to ask and is dependent on the situation. Sometimes it is a good idea to invoke a strong enough punishment to deter cheating. As a result, the punishment may never be used due to its severity.

The final requirement is repetition. Punishment needs to be continuous for all players and repeated as necessary. However, players who have long-term relationships with others run the risk of developing a reputation that will damage the relationships of current and future players. If you are a known cheater, in any form being sports, business, etc., others will turn away from you. This could be teammates, teams, customers, and business partners. This is not saying that punishment is always the way to go for cooperation. However, for punishments to be effective, defining these frameworks will improve the chances of cooperation.




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