The Risk of Being the Sucker

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The fear of being exploited by others – rather than the temptation to follow your own self-interest and exploit other people – is the greatest threat to cooperation. This is the conclusion from a recent meta-analysis of social dilemma games by Professor Friederike Mengel of the University of Essex. As a closely-related idea to collaboration, the willingness to cooperate sets the stage for jointly pursuing a shared outcome. If that cooperation is undermined, the collaborative endeavour itself will flounder.

Professor Mengel studied cooperation under controlled conditions, using the prisoner’s dilemma game to gauge whether the risk of them being exploited or the temptation to exploit was higher. In the prisoner’s dilemma game, two prisoners have to decide independently whether to cooperate with each other or not. If both cooperate, both go free. If neither cooperates (both “defect” which means saying the other person is guilty), both stay in prison. But if only one cooperates and the other defects, the defector goes free and the one who cooperates stays in prison. The game captures the trade-off between the risk of being exploited and the temptation to exploit (using the frame of reference from Professor Mengel), because while it is better for both parties to cooperate, individually one is best off if they defect while the other cooperates. The one who defects takes everything, and the one who cooperates loses everything. The overall conclusion was that in low-risk one-shot games, rates of cooperation are the highest. Which also means that:

  • In low-risk, multi-shot games – where players can establish a reputation for cooperating or not that can then be used again them – rates of cooperation are not as high. The longer you cooperate, the greater the risk that at some point another party will take advantage of your tendency to do so.
  • In high-risk games where the potential payoff is significant, rates of cooperation are not as high.

“What if they cheat me” becomes the rallying cry in these situations where this fear takes root, and as a consequence, people hold back from cooperating to protect themselves from loss.

One implication for collaboration in organisational life is that collaboration denotes more than just ad hoc working together. Structured and long-running collaborations benefit from terms of reference, contractual obligations, and checks-and-balances in resource allocations. These formal mechanisms decrease the perceived risk of being exploited and thus increase the likelihood that people will both cooperate and collaborate effectively over the long term.

It also sounds a warning on only building trust using the tit-for-tat approach, because while a pattern of responding in kind can be built up over time through repeated interactions, there’s nothing to stop one party from making the decision to exploit the other as the rewards available increase. Or for one party to hold back from fully investing in the work because they fear being exploited at the last turn.

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