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Baanda mitigates the Prisoner’s Dilemma

September 6, 2017

 

Some say that life is all about competition. Only the fiercest survive.  However, across multiple disciplines, we observe that cooperation, collective actions, and complex interdependencies play a more important role in the evolution of society. 

 

Ancient humans were hunters and gatherers. At some point in our evolution, humans observed that we had to collaborate. In order to collaborate, we had to use some form of language to coordinate. At the very least, we needed to express, for example, how would our hunters coordinate a big game hunt and how would the meat be shared among the group? For that society to survive, there must have been some form of collaboration that co-existed with survival of the fittest and the fiercest. 

 

As civilization took hold via agriculture, people began to create settlements. Groups became families, families became tribes, tribes became kingdoms and kingdoms became empires. As the complexity of civilization grew, so did the sophistication of symbolic communication, which lead to written alphabets. For centuries, written documents, from stone tablets, to papyrus scrolls of the library of Alexandria, were scribed by individuals. The actual aspect of writing and reading remained in the select realm of the elites.  

 

In more recent history, a new technology came along - the printing press. Within decades of it’s inception, millions of people became literate. A new form of collective knowledge emerged. Religion and politics propagated. This led to the scientific revolution of the 20th century. Literature spawned everything from parallel universes to constitutional democracies. Though commerce is ancient and the concept of market and trade is as old as the cross roads, the concept of capitalism, took off on the back of emerging technologies.

 

In today’s many-to-many era, every handheld device is a printing press, a broadcasting station, a community, and a market place. Today we carry devices that would have been considered super computers a couple of decades ago and are we connected to each other in immense networks. The internet has enabled broadcasting, enhanced literacy, and enabled massive social and political upheaval. This is made possible by social media based collaboration that did not exist before.

 

Whether it is ancient collaboration or today’s enhanced age of communication, the nuances of collective actions weave around what sociologists call “social dilemmas”. For example, “Prisoner’s Dilemma” is a well-known example of a game analyzed in game theory in which two individuals are unlikely to cooperate even if it seems to be in their best interests to do so. Players are presented with a situation in which they each have two options and the outcome depends on the simultaneous choice made by the other. It is often formulated in terms of two prisoners separately deciding whether to confess to a crime.

 

Prisoner’s Dilemma is a game that is overlaid on a mathematical matrix that came out of game theory in the early years when we were thinking about nuclear war where two players could not trust each other. 

 

In real life, every un-secure transaction is a situation of Prisoner’s Dilemma. Imagine a person with goods and a person with money. They don’t trust each other and neither of them wants to go first to exchange. Of course, if they don’t do the transaction, then they both lose. Wouldn’t this be so much better, if the Prisoner’s Dilemma could be turned into an alternative pay-off matrix of assurance? How do we get there?

 

Robert Axelrod, a researcher and scientist who studied cooperation, asked a simple question, “If our ancestors were fierce competitors, how does cooperation exist at all?” He studied strategies for Prisoner’s Dilemma. He found that the simplest strategy won. That is “tit for tat” meaning that an action is countered with a matching response - competition with competition and cooperation with cooperation. It is an effective technique to reduce conflict.

 

There is another such game known as Ultimatum Game that studies how people make economic transactions. This is how the game goes: There are two players who do not know each other; they have never played the game before; they will never play the game again; and are in separate rooms. The first player is given one hundred dollars and is asked to propose a split with the player in the other room. It may be 50-50, 80-20, 90-10 (whatever the person wants to split). The other player in the other room can accept the split and both players get paid or the other person rejects it and no one gets paid and the game is over. Neo classical economics suggests that it is not wise to reject a dollar because the other person in the other room will get 99. However, in a global test in America, Europe, and Japan, it was found that if the split was not close to 50-50, the other player rejected it. It also showed, that in most cases, people split very close to 50-50. 

 

Interestingly, when this was taken to other cultures, anthropologists found that slash-and-burn agriculturalists of the Amazon, nomadic pastoralists of Central Asia, etc. had a radically different concept of what is considered fair. This led to the observation that the concept of fairness, instead of being an innate sense, is heavily influenced by social values.   

 

Tragedy of the Commons is an economic theory that states that individuals acting in their own self-interest will despoil and deplete shared resources. Elinor Ostrom, a political economist, challenged this conclusion.  She found that cooperation plays a central role in human society. It has been seen over and over again, that rational self-interest is not a dominating factor and this seems to be the glue that holds society together. 

 

What will cooperation look like in the future?

 

Fierce competitors like IBM, HP, Oracle, have opened their intellectual property to be open source for peer-to-peer production. Some automobile companies train their suppliers to excel in quality, knowing fully well that the same suppliers also supply to their competitors. None of these companies are doing this out of altruism. They are doing this because they have learned that sharing is in their own best interest. eBay and other auction companies, for example, converted Prisoner’s Dilemma where no one can trust anyone into an assurance game that allows strangers to transact with complete trust.

 

What socio-economic problems can be alleviated if people are allowed to transcend the Prisoner’s Dilemma easily and usher in a brand new way of thinking? This is where Baanda enters the scene.

 

We envisioned Baanda as a tool that will enable people around the world to collaborate, transcend the prisoner’s dilemma, and usher in a new world order of cooperation.  

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