Cooperation Within Teams: A Review of Social Preferences in One-Shot Prisoner's Dilemma Game.
| Author | Suneja, Vivek |
Introduction
Team is defined as a "group(s) of two or more individuals who must interact cooperatively and adaptively in the pursuit of shared value objectives" (Converse et al., 1993). Teamwork is considered as the most vital strategies for organizational development and is widely used by various organizations across multiple domains (De Paola et al., 2019). Many instances have been found where some of the leading business organizations failed due to inefficient team management and the underlying issue of free-riding within the teams that not only hampers the productivity but also reduces the employee morale. The problem of free-riding and low individual outputs leads to sub-optimal usage of human resources which distorts the entire purpose of forming well-structured teams (He, 2012; Backes-Gellner et al., 2014). The existence of free-riders within the organization affects the overall team psyche and the sucker effect hampers the output of other members who feel exploited (Hutter & Diehl, 2011; Tavoletti et al., 2019; Delfgaauw et al., 2022). However, the problem associated with free riding is not unique to the organization--degree of cooperation or competition demonstrated by the members have been an age-old topic for discussion among researchers. To counter free riding and improve team effectiveness it is necessary for organizations to implement rules which discourage opportunistic behavior (Corgnet et al., 2015), and devise institutional mechanisms which disincentivizes free-riding (Harris, C., 2018).
As there has been a dramatic increase in the use of workplace teams resulting in substantial productivity gains (Glassop, 2002), the concept of team cooperation has attained a central position in theories pertaining to team dynamics, due to its consistently significant relationship with organizational effectiveness and its facilitative effect on group productivity (Delarue, et al, 2008). Hence, this study sought to put the focus on the underlying behavioral norms and heuristic principles used by the individuals in the strategic decision-making process which affects the team dynamics within the organization.
Strategic Cooperation: Evolution of Behavioral Game Theory
Cooperation is a key ingredient for team success, but can be counter effective in the presence of non-compliant group members who perpetually evade the norms established within the team. The functioning of team involves work interdependencies wherein individual contribution is dependent on the contribution made by the other members. Hence, to build a cohesive team, such work interdependencies require mutual cooperation by the members.
The standard game-theoretical framework is based on the fundamental assumptions of 'self-interest' which suggests that all rational individuals are in pursuit of achieving their personal objectives which maximizes their own welfare. The preferences demonstrated by people are egocentric and self-centered, and individual choice is the result of acting in a rational way that aims to achieve their own preferred outcome. In contrast to this, the social preference models defy these rules of exclusive self-centered rationality and claim that individuals also value the monetary payoffs of others, and are concerned about group welfare. The study by Fehr and Fischbacher (2002) revealed that increasingly large number of economic agent's value social preferences. Economic agents care not just about their own monetary payoffs and tangible benefits, but are also concerned about the distribution of money payoffs between them and the other agents involved in the social dilemma game.
It is widely believed that for any team to function effectively, its members must be able to work collaboratively. For cooperation to develop within team, the notion of collective rationality is one of the most fundamental issues that need to be resolved which can encourage members to voluntarily cooperate. To achieve a collectively superior outcome, there is a need that all the economic agents can accomplish consensus over a common goal (Sugden, 2015; Bacharach, 2006; Gold & Colman, 2020). A "rationally more rewarding" outcome can be derived when the members voluntarily cooperate within teams; it can lead to a win-win situation not only for individual members but also for the entire organization.
Researchers have provided significant experimental evidence that has contradicted the self-interest hypothesis underlying the standard game-theoretic models, and shown that in real-life scenarios, many people are motivated by concerns beyond their own material benefits (Charness & Rabin, 2002; Levitt & List, 2007). Social preference theory led to the emergence of a new wave of experimental research that offers alternate perspectives and insights into the strategic choices made by economic agents. The objective of this paper is to review these recent developments, and to highlight the varied types of preferences demonstrated by the players that contradict the standard paradigm of social dilemma games. To uncover the real-world complexities, the most commonly researched social-dilemma game is the two-person prisoner's dilemma game. In this study, we explore and review the various kinds of social preferences that players demonstrate in the one-shot prisoner's dilemma game and assess the impact of behavioral norms on the individual's strategic decision- making process.
Prisoner's Dilemma Game
The game was originally framed by Merrill Flood and Melvin Dresher at RAND in 1950 and was later enacted with prison verdict setting by Albert Tucker. The basic framework of the game is pre-sented through a binary choice matrix wherein two or more individuals have to simultaneously decide between two strategic choices. The theoretical basis of "Prisoner's" Dilemma involves two prisoners who are arrested and imprisoned for a crime. Each prisoner is kept in isolation in different cells with no scope of communication. To convict either one or both the prisoners for the crime, the prosecutors require their personal confession which can provide sufficient evidence to convict as per the law. In this scenario, each prisoner has two strategic options: either to cheat upon the other by claiming that the crime is committed by the other prisoner, or to cooperate with the other by remaining silent and not confessing. The possible outcomes are:
* If both Prisoner 1 and Prisoner 2 cheat and put the blame on the other, each of them will have to serves two years in prison.
* If Prisoner 1 cheats but Prisoner 2 remains silent, then Prisoner 1 will be set free while the entire blame of the crime will be on Prisoner 2 and will have to serve three years in prison.
* If Prisoner 1 remains silent but Prisoner 2 cheats, then as per the evidence Prisoner 1 will have to serve three years in prison while Prisoner 2 will be set free.
* If both Prisoner 1 and Prisoner 2 remain silent, both of them will serve less than one year in prison.
Since cheating provides the prisoners more benefit than cooperating with one another by remaining silent, so theoretically all self-interested prisoners choose to cheat with the other player. But in reality, several experimental research studies based on the framework of Prisoner's Dilemma game have demonstrated that individuals displayed a strategic bias towards mutual cooperation. There is no single solution or a fixed perspective that can help resolve this social conflict between the players. This study explores and review the various kinds of 'social' preferences that players demonstrate, and how this may induce them to cooperate in the single shot prisoner's dilemma game.
The structure of the standard prisoner's dilemma game has been simplified in Table 1, which incorporates two strategies for the players--either they can cooperate or defect.
When both players opt for cooperation strategies, i.e. the strategy to mutually cooperate and opt for CC their collective benefit will be maximized and both individuals will be rewarded for this cooperation. This Gain is denoted as payoff "G".
* When both players do not Cooperate, i.e. the strategy to mutually defect and opt for DD. For this both the individuals will lose and this is denoted as payoff "L" which is the worst collective result.
* If one player cooperates and the other does not, the co-operator loses and receives the lowest payoff "S", while the defector gains and receives the largest payoff "T".
The intersections of these two strategies gives rise to four possible outcomes: G (gain) and L (loss) which are the payoffs derived for mutual cooperation and mutual defection, respectively, while the temptation to unilaterally defect provides payoff T, and the payoff S as the loss borne due to unilateral cooperation. The strategic move to opt for Defect establishes (D, D) as the Nash equilibrium, but it leads to a pareto-inferior outcome. A mutually beneficial result can be derived if players collectively coordinate in...
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