There's a really interesting game that you can play to demonstrate strategies in conflict resolution.
In the game, the two parties represent two different oil-producing countries. In each round of the game, the two countries can choose to set the price of their oil at either $30/barrel, $60/barrel or $90/barrel.
If the two countries set their prices at different levels, the one that sets their prices lower will sell much, much more oil.
If the two countries set their oil prices at the same level, they'll have equal profits.
Clearly, in the long term, it's in everyone's best interest to sell oil at $90/barrel all the time.
The two countries, however, do not communicate with each other. They set their oil prices independently. All they can do is look at the past history of oil prices from previous rounds and then use that to decide the price for this round.
So, how does a country maximize profits?
And when a country sets the price of oil at a certain level one round, what message does it send to the other country for the next round?
What happens if you set prices at $90/barrel one round and the other country sets it at $60? What if the other country set their price to $30?
What would you do the next round?
And then the next?
Is there a simple formula or strategy that will result in the best outcome?
Is there a way to set prices in a way that builds trust between the two countries so that we can get to the optimal outcome?
It turns out there is.
This challenge was posed to a bunch of computer programmers, who came up with different strategies and the one that won turned out to be a surprisingly simple line of code.
Basically, whatever price the other country put up in the last round, that's the price that we choose for this round. It's tit for tat, a strategy of reciprocation.
Originally this was the strategy that resulted in maximum profits in every game.
And then, someone came up with a strategy that worked even better.
This one said:
Whatever price the other country put up in the last round, that's the price that we choose for this round. Once in a while, though, throw a 90.
So back to conflict resolution and human relations. In general, it makes sense to reciprocate the actions of the people you're dealing with. That's what the first line of code tells you to do.
It's even better, though, if once in a while, you not only reciprocate, but you do something unexpectedly good. Throw a 90.
It's interesting that this strategy that holds the most potential for mutual gain, is also the most vulnerable position for the one offering it.
In the game, the two parties represent two different oil-producing countries. In each round of the game, the two countries can choose to set the price of their oil at either $30/barrel, $60/barrel or $90/barrel.
If the two countries set their prices at different levels, the one that sets their prices lower will sell much, much more oil.
If the two countries set their oil prices at the same level, they'll have equal profits.
Clearly, in the long term, it's in everyone's best interest to sell oil at $90/barrel all the time.
The two countries, however, do not communicate with each other. They set their oil prices independently. All they can do is look at the past history of oil prices from previous rounds and then use that to decide the price for this round.
So, how does a country maximize profits?
And when a country sets the price of oil at a certain level one round, what message does it send to the other country for the next round?
What happens if you set prices at $90/barrel one round and the other country sets it at $60? What if the other country set their price to $30?
What would you do the next round?
And then the next?
Is there a simple formula or strategy that will result in the best outcome?
Is there a way to set prices in a way that builds trust between the two countries so that we can get to the optimal outcome?
It turns out there is.
This challenge was posed to a bunch of computer programmers, who came up with different strategies and the one that won turned out to be a surprisingly simple line of code.
Basically, whatever price the other country put up in the last round, that's the price that we choose for this round. It's tit for tat, a strategy of reciprocation.
Originally this was the strategy that resulted in maximum profits in every game.
And then, someone came up with a strategy that worked even better.
This one said:
Whatever price the other country put up in the last round, that's the price that we choose for this round. Once in a while, though, throw a 90.
So back to conflict resolution and human relations. In general, it makes sense to reciprocate the actions of the people you're dealing with. That's what the first line of code tells you to do.
It's even better, though, if once in a while, you not only reciprocate, but you do something unexpectedly good. Throw a 90.
It's interesting that this strategy that holds the most potential for mutual gain, is also the most vulnerable position for the one offering it.
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