Professional negotiators often wax poetic about win-win outcomes: where both sides cooperate and compromise. In practice, win-win is never a dominant strategy. Lose-lose almost always beats it. Here’s why.
Adopting a Dominant Strategy
One of our clients asked us to help them define a set of dominant strategies for a new AI system. The goal was simple: For a given scenario, train the system to achieve better (winning) outcomes no matter what strategies any other competing systems might adopt.
In a laboratory, crafting a dominant strategy, where one exists, requires knowledge of contemporary game theory, some math skills, and a significant amount of testing. There’s not a lot of harm to be done trying to get a set of algorithms to obtain the lowest price for an ad or to optimize a media mix.
But in the real world, actions come with consequences. Is a short-term win good in the long term? Does winning mean more for me and less for everyone else? Or is winning defined as good for me if it’s also good for everyone else?
There’s another consideration. Outside of a gaming environment, a dominant strategy may not always be the best strategy, nor does it necessarily always lead to the best outcomes.
Unlike AI systems, human beings are pre-programmed and genetically wired to act in their own self-interest. As the saying goes, “Winning isn’t everything; it’s the only thing.” It may sound (or actually be) amoral, but there is some math to back it up.
Prisoner’s Dilemma
One of the most famous games in game theory is the “Prisoner’s Dilemma.” In the two-player game, you and your accomplice have committed a crime. You are arrested and immediately separated from each other. During your interrogation, you are given a choice: cooperate or defect. To cooperate means that you will tacitly cooperate with your accomplice and remain silent. To defect means that you will break your partnership and tell the authorities that your accomplice is guilty.
