Negotiation and the prisoners dilemma

Why would two completely “rational” individuals not cooperate, even if it appears in their best interests to do so?

This question has often been considered and is best encapsulated by the prisoner’s dilemma. Whilst this dilemma has principally been applied to game theory, it has other ‘real world’ applications most notably in politics. The dilemma is based on the work of Merrill Flood and Melvin Dresher in 1950, formalised as a dilemma by Albert W. Tucker later in that decade.

The Dilemma

Two members of a criminal gang are arrested and imprisoned. Each is in solitary confinement with no means of communicating with the other. There is insufficient evidence to convict the pair on the principal charge and they both hope to get sentenced to a year in prison on a lesser charge. Simultaneously, the prosecutors offer each prisoner a bargain – either to betray the other gang member by testifying that they committed the crime, or to cooperate with the other by remaining silent. The dilemma is:

  • If A and B each betray the other, each of them serves 2 years in prison.
  • If A betrays B but B remains silent, A will be set free and B will serve 3 years in prison (and vice versa).
  • If A and B both remain silent, both of them will only serve 1 year in prison (on the lesser charge.

Clearly the best outcome occurs if both men remain silent. However, time and again research shows that self-interest overcomes cooperation and on the basis that they might walk free, recipients of the offer favour betraying the other person. When both adopt this strategy, they both have cause to regret this decision.

Observing the recent statements by both sides of the ‘Brexit’ negotiation (the EU and the UK), you can’t help but wonder if we are seeing an example of the prisoners dilemma playing out in real-time before us. Specifically two completely rational parties who ostensibly seem to be leaving rationality at the door in their posturing and public pronouncements.

What is negotiation?

An accepted definition might be something like this:

Negotiation is a dialogue or discussion between two or more parties intended to reach a beneficial outcome (or agreement) over any issues or conflicts that might exists between them.

Noting that the emphasis is on ‘dialogue or discussion’, that negotiation is principally about people, is frequently overlooked. Negotiation is frequently portrayed as the business equivalent of combat. Opponents are often said to be “eyeing each other up”, we have “sides” and we frequently hear the language of conflict with “winners” and “losers”.

You’ll read plenty of books that promise winning methods and strategies. Often these promote approaches intended to get the best possible deal you can for yourself or your organisation. Nothing wrong with this, but it brings us back to the prisoners dilemma. As a one off, you can see how both prisoners would be tempted by the prospect of no jail time. It is a straightforward decision to turn in the other criminal when you strongly suspect the other party will remain silent. Noting the best option overall is that neither should say anything. What you generally find is that the ‘risk’ of ones partner in crime turning informant is often discounted by the ‘reward’ (aka self-interest) of walking free if they keep silent but you do not.

What happens if you cooperate?

An interesting thing happens when the prisoners dilemma is played repeated times AND both prisoners are informed of their partners decision in previous turns of the game. Eventually, they realise that cooperation is in their best interests. Eventually rational thinking overcomes the irrational/emotional decisions through which self-interest is promoted, especially when one prisoner can be ‘punished’ for previous decisions that have resulted in a poor outcome for the other.

What happens if you don’t?

I like a quote that Gavin Kennedy attributes to a streetwise individual in his book Strategic Negotiation:

“Sometimes you get what you want, sometimes you get what you need, sometimes you get what you get”.

In Gavin’s’ words, Negotiation is about trying to do better than just getting what you get!

You get what you focus on

Research repeatedly shows us that when we focus on self-interest, we get what we get. It is far better to cooperate and work with what you have (which doesn’t mean being soft) towards an outcome that works best for both parties (which they individually need to define for themselves) which is ultimately based on compromise.

This is especially the case in business and politics. We always hope that there will be another day – when we will be seeking new business from an existing client, or looking to build on past political cooperation. It is precisely at these times that previous decisions based on self-interest come back to haunt one, or both parties. It is a human response – when you have been the victim of sharp negotiation, you’ll be far more circumspect and careful next time.

Back to Brexit, by ignoring the research finding, isn’t there more than a little risk that in behaving irrationally both sides will not get what is in their interests, but will simply ‘get what they get?’. It is going to be fascinating to watch how this unfolds, noting that the UK will need a good relationship with Europe at the end of the process.

Remember negotiation is a discussion or dialogue to reach a mutually beneficial outcome. Entrenching into polar opposite positions and trading insults seems a curious starting point if this is the desired outcome. Perhaps the UK and EU need a coach?

Remeber, it is never too late to #ChangeSomething.