Rock, Paper, Scissors – Game Theory in Everyday Life

From the book: Rock, Paper, Scissors – Game Theory in Everyday Life by Len Fisher

  1. Stay if you win, shift if you lose
  2. Bring an extra player in
  3. Set up some sort of reciprocity
  4. Restrict your own future options so you lose out if you defect on cooperation
  5. Offer trust
  6. Create a situation where neither party can independently escape from without loss
  7. Use side payments to create and maintain cooperative coalitions
  8. Be aware of the 7 deadly dilemmas, and try to reorganize the benefits and costs to different players do the dilemma disappears
  9. Divide goods, responsibilities, jobs, and penalties so the result is envy free
  10. Divide large groups into smaller ones

The 7 Deadly Dilemmas from #8 above:

  1. The Prisoner’s Dilemma – Two people must trust one another to make a choice that achieves the best outcome for each.
  2. The Tragedy of The Commons – Members of a community must make conservative use of a shared resource to avoid destroying it.
  3. The Free Rider – A situation in which a third-party benefits from a resource without contributing to it.
  4. Playing Chicken – One party takes a position that requires the other to cede, and both suffer if neither does.
  5. The Volunteer’s Dilemma – Members of a group recognize the need for something to be done, and all will suffer if no-one volunteers to do it.
  6. Battle of the Sexes – Two individuals want to cooperate, but have different preferences for how to proceed.
  7. Stag Hunt – Working cooperatively has a chance of success, but an individual who breaks ranks (foiling the cartel) has a better chance of getting a lesser reward

This was a very interesting read for me introducing me to Game Theory and how it intricately affects everyday interactions between people and organizations. Though written to exemplify game theory in simple language, parts of it made me stop and concentrate to fully grasp. The points listed above are ways to use game theory for your personal success in these interactions.

Recommended reading!