Part-I: Applying the Prisoner's Dilemna to real life...

I read an article recently that talked about how Game Theory, a neoclassical micro-economics concept, could be applied to a whole range of human scenarios & subjects, including political science, evolutionary theory and artificial intelligence.

Game Theory of course, talks about how economic agents behave when the respective benefits and costs of their different actions depend upon the choices of other parties. It is quite often applied in oligopolistic markets, where each party faces a few strong competitors.

Rather than delving into the depths of Game Theory (of which I assure you, I know very little!), let me focus on the now-famous 'Prisoner's dilemna', the applicability of which particularly struck me. Now, elaborating on the essense of the Prisoner's dilemna in the written form of the English language is a task that even Prof. Pushan DUTT would cringe at. So let me illustrate the concept with a well-known scenario.

Jack and Jill commit a burglary and are arrested. They are taken to separate rooms and interrogated. Neither knows what the other is saying. If both Jack and Jill stay silent, they will both serve a 1-year jail sentence. If Jack stays silent however, and Jill confesses, Jack gets a 10-year sentence while Jill gets freed for her cooperation. Jack knows this and reasons that Jill will most likely think only about herself. Hence, it is certain that she will confess. Jack decides to confess as well and with Jill confessing too, both get 5-year jail senternces. The scenario is illustrated in the figure.


In the scenario, Jack has to keep in mind all available options to Jill since the the result of his actions are influence by Jill's actions. In this, it is clear that both parties have no option but to confess and hence, a collective equilibrium (Nash Equilibrium in economics parlance) scenario is for BOTH to confess.

This result is called the "Prisoner's Dilemna" because the final result is clearly sub-optimal! If both parties colluded and stayed silent, they would both get off with just a 1-year sentence!

There are infinite business examples where this game is commonly played out. Lets say Colgate and Crest have roughly equal market share of toothpaste sales in a given region. A tube costs $4 to produce and sells for $10, thereby reaping earnings of $6. As sales begin to stagnate, both parties get anxious. Ideally, they should BOTH stick to the current sales price. However, the fear of Crest slashing prices forces Colgate to slash its price to say $7, thereby reducing profits by 50%. Crest of course, does the same and now both parites record earnings of only $3 per tube. This is clearly sub-optimal, compared to the earlier $6 earnings, but in a sense, neither party has any other option. This is indeed, the Nash Equilibrium.

And herein lies the crux of the issue...where strict economics meets social and human behavioral patterns head-on.

"People are strictly selfish...(and) will seek to maximize their returns with little or no consideration to other parties, save for family". Famous words by Richard Dawkins in his popular, controversial book 'The Selfish Gene'.

Makes for dismissive reading if you're an optimist. But how applicable is the concept when rationalizing people's everyday behavior? And if true, why do most people continue to act selfishly when it clearly undermines the collective good?

On July 25, 2007, Ms. Pratibha Patil was sworn in as the first woman president of the republic of India (13th overall). In my follow-up post, I'll look into how the process epitomized a Prisoner's dilemna and how we continue, time-after-time, to fall into this trap. Till then...

INSEAD July '07 Graduation Day!

Late post this is indeed, but I reckon Graduation Day deserves it. Well, July 5th 2007 marked the official conversion to designated suit-people for 425 of us!

My mom and sis managed to make it over to the forests of Fontainebleau which certainly made it extra special. Add to that the fact that 5th July was mom's birthday as well made the day just about perfect.


Well, as I've mentioned earlier, the Graduation was held in a tent on campus, something that put off several of the participants. I have to say though, that the ceremony itself was very well organized and the content was just right.

Brief speeches by Dean of the MBA program, Antonio Fatas, a man well-respected by the MBA community and Frank Brown, Dean of INSEAD, a man towards whom the student body sentiment is...lets say undecided, kicked things off. Speeches by student council presidents from both campuses and an entertaining speech by a current student, nominated by the class, followed.


Then the process of distributing degrees to over 400 students, some of whom had gone through the same ceremony barely 24 hours before in Singapore! It was interesting to see some of my friends walk up and receive their degrees on stage. Most were very proper, preferring to calmly walk up, take the degree and get off. Some were more animated. Narang brushed the perspiration off his brow for making it, Sheinal's joy knew no bounds, Sood gave us the 'namaste'...once too many times, I'd say. I let an air guitar rip. It was fun.

Cocktails followed, with the usual mix of faculty, students and most importantly, family. It was amazing to see so many family members turn out. There were mothers, fathers, brothers, sisters, wives, husbands, girlfriends, boyfriends, uncles, nephews, grandparents...oh, it was an amazing mix. McGauran's dad hitting on Valli's mom...genes.

The ceremony also started things off with a huge round of applause by students and faculty to all the family members, those who had made it and also those who could not. Be it financial or psychological, I know for a fact that without my family behind me, I never would have gotten here and the same holds true for most, if not all of us. So while we celebrate our success, here's a toast to my dad, mom and sister. You guys are amazing and I love you.

Less than 24 hours to Graduation...

So, it finally is here. Tomorrow is Graduation Day. Tomorrow at this time, I will officially be part of the Alumni fraternity. Sounds weird...

August 28, 2006 seems like just yesterday...and yet, a lifetime ago. I can barely believe it, yet it has started to hit me. Irrespective, I'd like to think we've all come a long way in a very short time. I've met several people who will be friends for life...whom I will seek to meet with at every opportunity presented. And THAT, more than anything else, has been the making of a successful program here to me.

We're all going to take a bit of time to move past this. Its been fun and exhilarating and tough. More on that later...

I look forward to fond farewells tomorrow...

'Been a long time since I Rock N' Rolled...!

...it really has. For the music psycho I am, there has been precious little excursion on my part ever since I ventured into the heartland of La France. Have not heard anything new that excites me, have not jammed at all, in fact, have barely heard much music.

Which is why when the traditional "INSEAD Cabaret" evening came around, a few of the guys got thinking about putting up a small sequence of songs, mostly Rock-ish. We practiced for just one 2-hour session the evening before the show and got on stage the next day more on hope than any real confidence or conviction.

The INSEAD Class of July '07, as expected, turned out to be totally supportive. We started slowly with a rocked-up version of "Hit me baby one more time".

Next came Blur's Song 2. Finally, the anthem "Smells like Teen Spirit"...which totally rocked the house! Our band was thrilled at how the crowd got involved!


LONG LIVE THE INSEAD SPIRIT !