I Smell a Rat! The Prisoner’s Dilemma

Did you know the original Universities were designed as Prisons to keep unruly young men caged up while their hormones drove risky behavior that threatened the local social harmony?

Rather than allow young people to take risks that help them to grow and experience life, we continue to indoctrinate them with social rules to help keep the order.

The risks available to busy students are far less violent than what may be the alternatives.

I don’t remember everything from University. There certainly weren’t a lot of dangerous risks in the small town where I studied.

Dorm life was a party — and we could smoke indoors! A “career” after graduation seemed a lifetime away. Econ 101 taught me the benefits of Free Trade.

I hated this class! Photo "Amherst63-012" by NealeA, Flickr, CC-By-2.0
I loved this class! Photo “Amherst63-012” by NealeA, Flickr, CC-By-2.0

And while I learned a lot I’m sure, there is plenty that I didn’t learn.

Maybe you, too?

•We didn’t learn how to start a business in university — the mindset of an entrepreneur.

•We didn’t learn how to create and maintain a budget — the mindset of habit.

•We didn’t learn to negotiate — the mindset of persuasion.

This is the reason I’ve started PersuasionReadingList.com — to learn what I should know to understand what moves the human mind, and to share these concepts of influence with you.

And that’s what takes me back to Free Trade and Econ 101.

One of the most basic principles in economics is that of Free Trade, and how Trade benefits all parties (or it should).

Quick example. Every person or group — we’ll call them ‘Parties’ — has its strengths.

Maybe Party 1 is really good at making widgets. By focusing its energy on maximizing that strength (making the most widgets), Party 1 can trade with Party 2 which (conveniently) grows the most tomatoes. Party 1 loves tomatoes! And Party 2 just happens to hate making widgets! What a perfect trading opportunity!

Everyone wins when they don’t have to do what they hate.

This Party trick works for people, companies, cities, nations, and even trade among intergalactic bodies (you’ll see). This is what drives capitalism and commerce. Producing inferior goods or unwanted items is what causes companies and planned economies to fail.

Ah but the Prisoner’s Dilemma shows the ugly side of Free Trade, when parties are only interested in their own best interest. Logic and Reason (and their information sources) are limited and can result in a non-optimal outcome.

"MM00014750x" from Florida Keys Public Library, Flicker CC-By-2.0
“MM00014750x” from Florida Keys Public Library, Flicker CC-By-2.0
The Prisoner’s Dilemma

The concept of the Prisoner’s Dilemma is that Two Criminal Suspects Are Accused of a Crime. The two suspects can accuse the other, or remain silent. (They aren’t confessing).

  • If neither is accused by the other, they each get only a short prison sentence (for a lesser criminal charge because no one’s getting away with anything under my watch)
  • If one suspect rats out the other suspect, the accused gets a long prison sentence, and the un-accused gets the short sentence (for a lesser criminal charge). This “rat out your partner” is always the deal offered by the police. Of course, one party has to remain un-accused for anyone to benefit.
  • If they both accuse each other (trying to get the deal), they split the longer punishment and each get a medium prison sentence.

The two prisoners both want the lower prison sentence that is offered, by ratting out their partner. Logic dictates that each prisoner rats out the other, hoping to get the shorter sentence. Once accused by the other, of course, they can no longer receive the shortest sentence. They both lose.





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Understanding the Prisoner’s Dilemma is important when studying persuasion and influence, to know what others may be thinking and to get ahead in your own life.

  1. Freeze, Flight, or Fight. When someone thinks they’re being backed into a corner, they may act against their own long-term best interest. They’re in the middle of a limbic reaction to a threat — they may not thinking rationally. Take care in your presentation of ideas, so that people don’t knee-jerk towards the opposite. If you’re in this type situation, take your time to process the information.
  2. Win-Win Negotiation. A negotiation is not the same as a compromise, where everyone is unhappy. A good negotiation includes more variables into the negotiation, creates a larger pie that everyone can share. Some aspect that you don’t care much about might be immensely valuable to the other parties. Complex deals include more aspects that interest people, while giving you a lot of flexibility. How can you “Grow the Pie” to increase everyone’s opportunity to come out ahead?
  3. Expand the Frame. The prisoners in our example have no knowledge beyond their own interrogation room. In life we often don’t know what we don’t know (WYSIATI). Whenever possible we have to explore what more we don’t know, to better understand our choices within a greater context. This is very difficult to do on our own, which is why we have peers and mentors and friends that can help us take the outside view.
  4. Prospect Theory. People may be employing Prospect Theory, which states that people will take greater risks when they think the outcome may be unfavorable. This isn’t necessarily beneficial. Are you risking too much?
  5. Identity and Consistency. In a low-risk situation, people usually stick to their initial gut decision for most choices. To them, for whatever reason, it “just feels right.” This justification and resistance to change can make it difficult to persuade people into cooperative behavior. You must frame the benefits as being larger and more irresistible than the drawbacks.
  6. Options. Keep your options open for as long as you can. You never know what’s coming.

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