Managing Laterals

What is the deciding factor on whether or not you trust someone? Although we effortlessly differentiate between those we trust and those we do not, we need to shift into what psychologist Daniel Kahneman refers to as System 2 Thinking to consider how we came to these conclusions. Our intuitive choice to trust someone is rooted in their degree of similarity to us in social identity as well as our perception of their reputation. Con artists are experts on hijacking these autonomous trust mechanisms by learning just enough about the values and identity of their victims to fabricate a familiar and cozy decoy to lure them into making a move they live to regret.

System 1 - our automatic emotion-driven thinking - saves us a lot of effort and time. Imagine someone in front of you in line to order a coffee who is painstakingly analyzing every possible option on the menu rather than just going with their gut. What a nightmare. But the choice of System 1 or System 2 thinking is not black and white. It does not have to be 100% on or off. Instead of throwing everyone we know into a trust or don't trust bucket, we will benefit from increased flexibility by evaluating every choice objectively on a case-by-case basis. Rather than letting our System 1 simply rule in favor or against an option based on who is involved, consider the motivations driving the offer. Does what you are getting and what they are getting out of the agreement make basic logical sense or does it come off as too good to be true? Let System 2 consider the known information and let System 1 freely react to the gut feeling of any body language or social context available. We may benefit from extending limited trust to a rival and we may take a loss from thoughtlessly going along with a friend or reputable colleague. Everything is a case-by-case scenario. Pure logic or pure emotion are no match for the combination when deciphering the best action to take. Now let's jump from us trusting others to why or why not others may trust us.

You can find many sources of tips and tricks for various forms of manipulation with a quick Google search. These techniques may succeed in gaining shallow trust momentarily to get someone to signup for something or make a purchase they otherwise would not have - think used cars and time shares. But this type of fleeting trust is not valuable in long-term relationships such as between coworkers or teammates. Deep lasting trust is earned. It is built on proven honesty and consistently matching words with actions. It takes only a single failure of following through to burn trust to the ground. While most people will excuse a rare disappointment, it will not be easily forgotten. When we take accountability and own up to our failures we have a better chance of repairing the damage to the relationship. Giving excuses and blaming external cirmumstances and other people digs a deeper grave and erodes any respect the disappointee may still hold for us. The most important thing we can do is guard this trust others have in us with every fiber of our being. Reputation is something that cannot be bought and can never be fully repaired once damaged.

It is comforting to imagine that everyone we work with values the good of the team above their own self-interest. While comforting, it is also naive and plainly wrong. We humans are animals programmed by our natural evolution to compete for status in social hierarchies. This competitive hierarchy manifests in student bodies, sports teams, sibling rivalries, and of course workplaces. We are all subconscously reading the room at all times for signs of each person's status in that particular culture. Who is the smartest? Who is most aggressive? Who are the most physically attractive male and female? Who is weakest? We are always surveying the environment for social cues. This is our reality and is morally neutral. It is the nature of the animal kingdom and we are not exempt simply because we are highly intelligent, carrying supercomputers in our pockets, riding in flying machines, or adorned in Rolex and Armani. It may be an uncomfortable idea to someone who has never considered it, but it is nonetheless the obvious truth.

The practical result of this is the way we all mask our true feelings in communication to one another and the degree to which we do so. Something that is sure to get a target painted on one's back is arrogance. When an arrogant person is also the most attractive and/or wealthy specimen in the arena, others may allow their haughty displays to go unchallenged and even signal admiration. Behind the role being played by those feeling inferior is a natural burning envy and resentment toward the alpha regardless of how supportive they act on the surface. When arrogance is flaunted by anyone lacking an armor of social superiority - less favorable looks, money, popularity, etc. - the people around them will reveal their true reaction to the degree which the arrogant target lacks social clout. For example, a new attourney bragging about his first successful case to his blue collar friends will be met with praise despite their inner feeling that he is foolsihly giving himself credit when in reality he only had the opportunity to become a lawyer because his parents are rich. Outwardly, the blue collar friends obey the social contract of respecting a higher status career. Later, when the attourney brags about the same success to the far more experienced attourneys at his firm, they chuckle at him and treat him like a little boy who learned to build a block tower and one of them who was in the middle of a divorce and had not slept well in weeks scolded the young attourney for ignorantly believing that his small success was anything at all to be proud of. Simply put, those below you in the social hierarchy show insincere admiration, while those equal or above you will feel more comfortable responding with their honest reaction.

With that in mind, we can benefit by making calculated moves in these social chess matches rather than being led by raw instinct as most people are. Your most powerful tool is self-restraint. As Robert Greene explains in his masterpiece 33 Strategies of War, you must train yourself to maintain presence of mind in tense moments and avoid allowing emotions to cloud your judgement. Choosing not to engage when provoked is a superpower. Provocation can be a trap and those without this ability will fall headfirst into it every time. Choose to engage in conflict only when you are on battleground which you have carefully chosen and lured your opponent to. Every social or political situation has the potential to be a sort of competition or battle. Wisdom and self-discipline are more valuable to you, the metaphorical warrior, than strength or aggression.

Game Theory concepts provide us with mental models to use for mapping out potential outcomes in social scenarios. If we have enough data to fairly accurately understand the motivations of our competitors, we can use these mental models to predict outcomes and make decisions based on something more substantial than hopes and dreams, gut feeling, or biased beliefs based on subjective interpretations of past experiences.

Cooperative Games

This category of game theory describes groups of interacting individuals who are able to form coalitions. Certain individuals end up forming cooperative bonds and working to benefit their own coalition and competing against anyone outside of it. The ability to form coalitions requires an environment with external enforcement of cooperative behavior such as a legal system backed by a military force or even a situation where all players understand that survival alone is impossible.

Any civilzed state with a form of government which has laws and enforces them with financial penalties, loss of freedom, and/or violence is a large scale coalition game. For example, in America, citizens can choose to become employed by a business where they are bound to perform work which benefits their employer and in turn benefits themself by being compensated for their work. The business is a coalition of individuals sharing a group identity. This business competes against other businesses in the market.

Non-cooperative Games

This type of game is characterized by the inability to form externally-enforced coalitions. There is either no option to work with anoyone else as a team or if so any agreement must be self-enforced by violence or the surrender of personal resources. In human life, any cooperative game can be viewed more granularly as multiple non-cooperative games within the coalition. Think of competition between players on the same sports team. Despite working as a team in a broad sense, each individual can still have their own agenda within the internal politics of the team. Human-designed games such as computer games and board games can be truly limited to strictly cooperative hard rules. However, when it comes to our life as humans, we understand that within any coalition there is an element of non-cooperative gaming. This is often taboo to directly acknowledge. Nonetheless, failing to pay attention to it is a major vulnerability.

Symmetric Verses Asymmetric Games

In a symmetric game, any player who performs an identical action earns an identical payoff for that action. The characteristics or identity of the player do not impact the result of their actions positively or negatively. No characteristic can provide any player an advantage over other players. A simple 1-on-1 game of chicken can be an example of this - although even this is not black and white depending on the amount of information known by the players.

Relationships and identity factor into any scenario involving two or more interacting human beings when at least one of the individuals knows any identifying information about any of the other individuals. When known identity information impacts the decisions of players in any way, the game is asymmetrical. If a company determines the price they will sell a product in a retail setting, they have limited information on the individual identities of the purchasers. They only know the general demographics and location of the consumers of the stores which will sell the product. Their price is set equally for every consumer in this broad category. This price point - while it is a take-it-or-leave-it ultimatum - is symmetrical for anyone who shops at these stores.

When a price can be adjusted based on known identity information about the potential buyer, the game becomes asymmetrical. The sales manager of a used car lot can fluctuate the flexibility of their pricing based on their sense of the financial disposition of the potential buyer. Another example - dynamic pricing - is rampant in the world of online shopping. Many companies use goegraphical data or more granular individual consumer data to alter their online listing prices in order to squeeze the higher prices from individuals who they expect to be capable of affording more. Surge pricing is a version of this which dynamically raises prices across the board based on sudden increases in demand or drops in supply rather than discriminating on a sale-by-sale basis based on suspected individual purchasing power of the potential buyer.

Negotiating for a salary is inherently an asymmetrical game - very similar to buying a used car. The leverage is greater for whichever player has more information about their opponent or is less desperate for the transaction to be finalized. If the hiring side knows the financial disposition and demographic of an individual before entering negotiation or making an offer, they are able to calculate within around $1,000 an annual salary which a rational actor in the known demographic will accept. The hiring party has absolute leverage on the job seeker unless there are competing offers from hiring parties. If so, the job seeker will either give the competing hiring parties opportunities to raise their bids or else select for other factors such as expected work-life balance, culture quality, or other non-financial perks like hybrid work days or company-supplied lunches. Regardless, the hiring parties have leverage over the job seeker because even if they are coerced into raising their offer to some degree, it is still within a range they are comfortable with and expecting.

Will a hiring party ever offer a higher salary than they are comfortable with and expecting? This can only occur when the candidate has leverage over them. The candidate could have internal knowledge about the company and the extent to which they would be impacted by not retaining the candidate. In the event that such an irreplaceable candidate threatens to leave the company without a specified salary increase, the employer is likely to meet their demands - even if only temporarily until they can reorganize to supplant the individual even if it requires multiple new employees to do so. This scenario is rare outside of the top level of the C-suite. Organizations are designed with this possibility in mind. No matter how good you are at your job, it is highly unlikely that you are singlehandedly holding together a sufficient segment of the operation to justify the company suddenly sacrificing an unplanned percentage of earnings to retain you. The middle-management body of medium and large businesses is held to some degree of bloat specifically to disallow this type of leverage from accruing.

Zero-sum Games

A zero-sum (or constant-sum) game describes any situation where an individual's gain will always result in another individual or group losing an equal amount of that resource. The idea of a scarcity mindset goes hand-in-hand with the concept of the zero-sum game. Poker and chess are simple examples. A game is non-zero-sum when a gain by one individual or group has net benefits beyond that individual or group which equal more than the primary gain. An example of a non-zero-sum gain would be the sale of a product which replaces an environmentally hazardous product. Something like nicotine gum which replaces a cigarette habit non-zero-sum because, while the seller gains the value of the currency that the buyer loses, the buyer also has the net benefit of improved health and their family and anyone who would be negatively impacted by the secondhand smoke also gain a net benefit.

Please explore more Game Theory concepts at your convenience.