I recently read V. Raghunathans "Games Indians Play - why we are the way we are". Interestingly the cover has, "Foreword by N.R. Narayana Murthy", confirming the author's Indianness, in flaunting famous personality endorsements.
It’s a book that is absorbing and I agree with most of the authors views. The only view I completely disagree with is actually the basic premise of the book. He attributes a large part of the ills in Indian society to the way we are, and considers lack of effective implementation or enforcement. I believe that Indians, replicate most of the characteristics of global citizens and the primary reason for the ills is a lack of effective implementation and enforcement of laws.
In the book, the author refers extensively to the Game Theory and its variations. The one I want to touch upon is the "Tit for Tat" algorithm. This has been found to be the most effective solution in solving "The Prisoner's Dilemma". You can read more about the Tit for Tat theory and its application in "The Prisoner's Dilemma" at:
http://en.wikipedia.org/wiki/Tit_for_tat
Let me briefly touch upon what exactly does the Tit for Tat algorithm entail. Its actually as simple as the 3 words used. It responds in the same way as the competitor. However, it has a few rules. It by itself will not be the first to defect. But, if provoked by a defection, it will retaliate by defecting. It in a sense is a smart variation of Gandhiji's "Show the other cheek" theory. Here, you show one cheek and continue to interact in a fair manner. However the moment you are slapped, you withdraw both cheeks, and slap back at the first opportunity.
This has major implications in the way we do business, as well as conduct our activities. It has implications for both, the persons who are fair minded and conduct business or their lives in an ethical manner, as well as those who are selfish and would like to maximize profits. And that's what makes this strategy so amazing. It’s not only ethically and morally correct, it’s also the one that's likely to maximize profits over the long term.
Let’s examine its veracity and the expected behavior. There are 2 scenarios as mentioned above. Lets first take the case of the honest business person, which is considered as an oxymoron by most Indians. In any of their business dealings they would like to be fair. Hence they follow the first rule of not defecting first. They will continue to keep their end of the deal, as long as the counterpart keeps their part of the deal. As soon as the counter party defects, the theory suggests that so should they. This will give a message that a defection will be retaliated with a defection.
The defecting party has an option to no longer deal or try and deal once again without defecting. The Tit for Tat, will respond positively when the counter party initiates a positive interaction. Hence the ethical business person will have a maximum of any one losing transaction with any counter party. What makes this effective for the business is that ethical counter parties will love to deal with the "Tit for Tat" follower, since they always keep their end of the bargain. Interestingly, even the crooks’ will love to deal with them, since they never are the first to defect, and so they can never lose.
And now let’s take the case of the profiteers. They would like to maximize their profits. They are likely to deal with either opportunists like themselves or with ethical people. In the first case, they run the risk of the opportunist defecting and them losing before they have a chance to defect. Even if they manage to defect first, the opportunist having lost is unlikely to deal with them again. And so the dealing will last for a short time. When the opportunist deals with the ethical person, he will have 1 hugely profitable transaction. But then will lose an opportunity of dealing with the same party. Quickly their reputation will precede them, and they will have no one left willing to deal with them.
Hence to me it seems like behaving in an ethical manner is not only the right thing to do, it’s also the smart thing to do. In addition to being good for the soul, it’s going to be good for business.
It’s a book that is absorbing and I agree with most of the authors views. The only view I completely disagree with is actually the basic premise of the book. He attributes a large part of the ills in Indian society to the way we are, and considers lack of effective implementation or enforcement. I believe that Indians, replicate most of the characteristics of global citizens and the primary reason for the ills is a lack of effective implementation and enforcement of laws.
In the book, the author refers extensively to the Game Theory and its variations. The one I want to touch upon is the "Tit for Tat" algorithm. This has been found to be the most effective solution in solving "The Prisoner's Dilemma". You can read more about the Tit for Tat theory and its application in "The Prisoner's Dilemma" at:
http://en.wikipedia.org/wiki/Tit_for_tat
Let me briefly touch upon what exactly does the Tit for Tat algorithm entail. Its actually as simple as the 3 words used. It responds in the same way as the competitor. However, it has a few rules. It by itself will not be the first to defect. But, if provoked by a defection, it will retaliate by defecting. It in a sense is a smart variation of Gandhiji's "Show the other cheek" theory. Here, you show one cheek and continue to interact in a fair manner. However the moment you are slapped, you withdraw both cheeks, and slap back at the first opportunity.
This has major implications in the way we do business, as well as conduct our activities. It has implications for both, the persons who are fair minded and conduct business or their lives in an ethical manner, as well as those who are selfish and would like to maximize profits. And that's what makes this strategy so amazing. It’s not only ethically and morally correct, it’s also the one that's likely to maximize profits over the long term.
Let’s examine its veracity and the expected behavior. There are 2 scenarios as mentioned above. Lets first take the case of the honest business person, which is considered as an oxymoron by most Indians. In any of their business dealings they would like to be fair. Hence they follow the first rule of not defecting first. They will continue to keep their end of the deal, as long as the counterpart keeps their part of the deal. As soon as the counter party defects, the theory suggests that so should they. This will give a message that a defection will be retaliated with a defection.
The defecting party has an option to no longer deal or try and deal once again without defecting. The Tit for Tat, will respond positively when the counter party initiates a positive interaction. Hence the ethical business person will have a maximum of any one losing transaction with any counter party. What makes this effective for the business is that ethical counter parties will love to deal with the "Tit for Tat" follower, since they always keep their end of the bargain. Interestingly, even the crooks’ will love to deal with them, since they never are the first to defect, and so they can never lose.
And now let’s take the case of the profiteers. They would like to maximize their profits. They are likely to deal with either opportunists like themselves or with ethical people. In the first case, they run the risk of the opportunist defecting and them losing before they have a chance to defect. Even if they manage to defect first, the opportunist having lost is unlikely to deal with them again. And so the dealing will last for a short time. When the opportunist deals with the ethical person, he will have 1 hugely profitable transaction. But then will lose an opportunity of dealing with the same party. Quickly their reputation will precede them, and they will have no one left willing to deal with them.
Hence to me it seems like behaving in an ethical manner is not only the right thing to do, it’s also the smart thing to do. In addition to being good for the soul, it’s going to be good for business.
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