The Prisoner's Dilemma In Business Competition

By: Tino Buntic
Submitted: 2007-01-17 11:53:16
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Have you heard of the "prisoner's dilemma?" It is a situation where two people are apprehended as suspects for a major crime. They are separated from each other and interrogated. There are two options available to each of the two suspects:

1. Don’t admit to the crime. If each person refuses to talk, each will get one year in prison.

2. Admit to the crime. If one prisoner admits to the crime and implicates his partner, he gets off free and his partner must spend five years in prison.

A problem for each of the two prisoners exists if both admit to the crime. In that case, both suspects would receive a three prison sentence.

The best possible overall scenario would be for each prisoner not to confess to any crime. In that case there would be a combined total of two years in prison (One year for each suspect). Option 2 would result in a total of five years in prison (Five years for the first suspect and zero years for the second suspect). If each suspect admits to the crime it would result in a combined six year sentence (three years each).

The prisoner's dilemma is an example of where acting in one's self interest does not always serve one’s self interest. Greed, too often, gets the better of ourselves. This often happens in the business world, too. Just take Enron or Tyco, for example.

Business competition is great and healthy for the economy as a whole and great within individual businesses; it fosters innovation, growth, and profits. But, with many people being individualistic it can cause problems, just as in the prisoner’s dilemma.

Take, for example, two top salespeople in a company's sales department. Let's say that each one is so driven to succeed that they'll do anything to achieve their goals and outdo eachother. Normally, the salesperson with the best numbers (most sales leads, most appointments, most referrals, most closed sales) would be seen as the top performer. But, being jealous, they both decide to sabotage eachother's performance, eachother's numbers, and they continuously talk trash behind eachother's backs (office gossip). This happens in countless organizations, be it in executive management, the customer service department, the accounting department, or even the marketing department. I think we would all agree that if they co-operated, each of these two salespeople would be better off; I think the two salespeople would agree too. Yet it happens. Our jealousy and self interest, too often, gets in the way of what would be better off for ourselves and the companies that we work for.

We must remember the golden rule when it comes to business competition, as taught by the prisoner's dilemma: Acting in one’s self interest does not always serve one’s self interest.

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