Me, myself, and “the other”: The effect of others in our decision-making processes

This article was originally published on our Medium Platform Rethinking Organizations.

Every single moment in our lives, we make a decision. Even if we are not making one, it indeed is the result of a prior decision made. One may think that others’ actions or decisions may not impact our decisions; what we decide for ourselves would be deeply rooted in self-interest.

Is it really? Let’s elaborate through an example.

Due to the climate crisis, most of the countries in the world are alarming about water scarcity.

One way to tackle this challenge is clever/better water usage in households. On that point, using a dishwasher and not rinsing the dishes before putting them in the dishwasher has a significant impact on water stocks, especially when everyone is mindful of this action.

But there is a caveat; for this action to have a collective impact, everyone should cooperate and act accordingly.

Some people think that rinsing the dishes is a very rational decision, simply because, otherwise, the dishes will not be clean enough. Yet when environmentally concerned people tell them about water scarcity issues, their reaction would go as: “Even if I stop rinsing, everyone will keep rinsing so my action does not lead to any change; so I will continue to rinse!

There are a couple of issues here. First, it seems that we are making our personal decisions based on what other people do. Second, even if this personal decision is serving our self-interests in the short-term when the whole society acts in this way, this action will cause detrimental results in the long-term for all of us.

In other words, other people’s actions have the potential to change our choices and actions to get the most advantages from them. Thus, we have to pay attention to other people’s decisions and take action strategically.

So, even though we think that we have made a personal decision that will provide the most benefit for ourselves, the decision that will benefit us the most depends on the decision made by other people.

Why do we act this way? Here game theory might be of use for an explanation. Game theory is a framework that works on decision-making strategies of rational, independent people and tries to explain these decision-making processes through mathematical models. Prisoner’s dilemma is one of the most famous examples of game theory. It indicates how two rational individuals decrease their benefits while trying to increase their self-interest.

What is the prisoner’s dilemma?

In the prisoner’s dilemma game scenario, two criminals are arrested. Due to lack of evidence, prosecutors have to bargain with the criminals to get a confession. During the interrogation, criminals cannot communicate with each other, and they have two main choices to confess or not to confess. If one of the criminals confesses and the other does not confess, the criminal who confesses the crime will be set free while the other is punished for three years in prison. If both of the criminals confess the crime, both of them are prisoned for two years. If both of them do not confess, they are punished for one year in prison.

In this scenario, the dilemma is: if criminals think and act based on their self-interest irrespective of the other’s decision, confessing would be the best action for both criminals rather than not confessing. As a result, criminals would serve two years in prison instead of 3 years.

But if both criminals co-operate and they do not confess the crime, both of them will serve only one year in prison. So, not confessing the crime provides the most benefit for them. Hence, this game emphasizes that deciding a self-interest rational individual does not give the most helpful case for individuals in every case; cooperative actions bring a better result for people.

What does the prisoner’s dilemma mean for organizations?

Organizations consist of people who make various decisions every day, from simple to complex processes of work. In every decision, we try to get the most benefit. So we try to be rational to be more efficient for the sake of organizational processes and efficiency. However, the prisoner’s dilemma shows that, being reasonable based on particular interests, is not enough to take the best action in the organization; also, collaboration is crucial. Every self-interested decision and action of an individual impact other people’s actions in organizations and even in the whole society.*

*Side note: This is also true for the organization as a singular entity. If an organization acts on its self-interest to maximize its profits and its resources, this would undoubtedly harm the ecosystem that organizations are in. The repercussions would be much more severe than short-term interest. Hence, an organization needs to consider long-term needs and others’ wants for the benefit of society while thinking about its short-term interests. This way of thinking is called “Cathedral thinking,” and to read more about it, look at my colleague’s reflection “Long-term thinking in a world where short-term benefits reign.”

Collective action is the essential and inevitable way to maximize individuals’ decisions’ benefits and long-lasting positive impacts.

Together with takeaways from the prisoner’s dilemma, a trustful relationship among people in the organization is crucial to foster collective action. In a trustful relation, people do not only think about their self-interest but also give importance to others’ interests. Besides, transparent and continuous communication among people in organizations increases collaboration because, in that way, everybody knows the results of their actions on their colleagues’ decisions and work processes of organizations.

Hence, while cooperation is very crucial to deal with challenging issues in work life, organizations have to rethink their organizational cultures in a way that whether their organizational cultures provide safety and transparency to create and sustain collective action rather than only focusing on rational self-interested actions.