Decision Quality Blog

Academics and consultants have been playing games of all sorts for years as a means of exploring how people react, respond, and make decisions under different sorts of stresses and pressures. There have been some real doozies (someday perhaps I’ll make a list). Here’s a new twist on a classic.

Common game theory has held that punishment makes two equals cooperate. But when people compete in repeated games, punishment fails to deliver, study author Martin Nowak said. He is director of the evolutionary dynamics lab at Harvard, where the study was conducted.

“On the individual level, we find that those who use punishments are the losers,” Nowak said his experiments found.

Those who escalate the conflict often wound up doomed.

The study was based on the classic thought exercise called the “prisoner’s dilemma”–a game we often use to illustrate both decision making and ethical concepts. Here’s the twist.

In Nowak’s experiment, the students played more than 8,000 games of “Prisoner’s Dilemma,” using dimes to reward and punish. The normal game of “Prisoner’s Dilemma” gives two players two options: cooperate or defect. If both cooperate, each ends up winning a dime. If both defect, each gets nothing. If one cooperates and the other defects, the cooperative player loses 20 cents and the defector wins 30 cents.

Nowak then added a “costly punishment” component. A player could choose to punish someone who didn’t cooperate. That penalized the noncooperative person 40 cents, but the other player had to pay a dime to mete out the punishment.

And the outcome?

When Nowak compared how much money people earned or lost in the long run, there was a noticeable correlation between punishment and overall money. The players who punished their opponents the least, or not at all, made the most money.

Those who punished the most made the least money.

Tags: Prisoner’sDilemma, cooperation, ethics, decision making, decision quality, Martin Nowak