The friendly extortioner takes it all

Cooperating with other people makes many things easier. However, competition is also a human characteristic. In their struggle for contracts and positions, people must be more successful than their competitors and colleagues. When will cooperation lead to success, and when is egoism more effective? Scientists behind this study have developed an experiment that enables them to examine the success rate of cooperative and egoistic behavioral strategies. A strategy referred to as “extortion” is particularly successful, according to the researchers. This strategy that alternates between cooperation and egoism is difficult to resist. The extortion strategy is especially effective when there is strong competitive pressure.

What the researchers say: “Extortioners often come across as friendly colleagues. They reciprocate friendliness with friendliness, making their competitors feel as though it must be a misunderstanding, if they are taken advantage of again and again. They are forced to play along to avoid losing even more. This seemingly friendly yet extremely tough exploitation strategy is rewarded with additional gain,” explains the lead author. Together with his team he examined the willingness of human beings to cooperate and exploit under varying conditions.

Calculations drawn up by the researchers show that mutual support can easily turn into extortion.  Experimenters use the so called prisoners’ dilemma to explore this issue of social interaction among human beings. In this game, two participants will benefit more if they cooperate, than they would if both of them behaved egoistically. However, if one player is egoistic while the other one cooperates, the egoistic player will receive the largest prize, while the cooperating player goes away empty-handed.

This means that cooperating is only worthwhile, if you keep encountering the same player, and are thus able to “punish” previous egoism and reward cooperative behavior. For a long time, scientists have considered this type of “tit for tat” strategy to be the most effective behavioral strategy and a recipe for mutual cooperation.

In reality, however, many people tend to cooperate less frequently, than is predicted theoretically by the prisoners’ dilemma. This discrepancy can be explained by the “extortion strategy” that has been found to as unbeatable. The extortioner takes advantage of the other player systematically, by forcing them to constantly cooperate. In 60 percent of cases, an extortioner will react to their counterpart’s cooperation by cooperating themselves. In 40 percent of cases they will behave egoistically and collect the maximum prize.

The co-player must comply with the extortioner, because it is the only behavior that will pay off for them. They are only able to increase their small gain, by cooperating more and more frequently, in order to benefit in most cases from the extortioner’s 60 percent of cooperation. Their gain will increase steadily as a result, but they will cause the extortioner to obtain a much greater prize.

Experiments showed that human beings tend to be encouraged to cooperate and to accede to extortion, when they are playing against a computer that employs the extortion strategy. But the experiments could not demonstrate, whether or not a human extortioner would eventually yield to their competitors’ attempts to discipline them and would return to more cooperative behavior.

The researchers set up over 100 experiments to see whether and under which conditions, extortioners can be disciplined. In 49 consecutive rounds of the prisoners’ dilemma, two players each played for real sums of money.

The scientists introduced a bonus to increase competitive pressure among some of the players.

Where there was no prospect of receiving a bonus, the players would quickly cooperate and usually obtain a high profit. If they used a cooperative strategy the extortion strategy did not occur.

However, if one of the players was enticed with a bonus, that player would often turn into an extortioner. If the other player kept trying to discipline them by refusing cooperation, the extortioner would resist and cooperate even less over the course of the experiment. Extortioners were also shown to be most successful in the long-term.

“Willingness to cooperate is not a recipe for success, if competitive pressure is strong. Our results show why human beings frequently prove to be less cooperative in real life, than has been predicted in the past,” the lead scientist explains.

So, what? The research confirms one of the points that Alicia and I often stress—bonuses don’t work for a business in the long run. What you get is less collaboration and therefore less productivity and because of that less profitability.