Game Theory and The Evolution of Trust

In business, as in life, all of our significant, productive encounters with others—our colleagues, our clients, our partners, our employees, our customers, our vendors—are built on foundations of trust.

But how is that trust created, what are its key ingredients? That's a question well worth exploring.

And this fascinating game-theory simulation helps us get a little closer to understanding how trust is built over time. Check it out.

I highly encourage you to set aside 30- to 45-minutes to play with this simulation and think deeply about it. Create a meeting with yourself and just do it. I promise it'll be fun and worthwhile.

If you want the Cliffs Notes version, read on.

You'll find that the results of the simulation suggest there are three foundational ingredients that lead to the development of trust:

(1) Repeat interactions – Trust keeps relationships going, but you need the knowledge of possible future repeat interactions before trust can evolve.

(2) Possible win-wins – You must be playing a "non-zero-sum game," a game where it's at least possible that both players can be better off—a win-win.

(3) Low miscommunication – If the level of miscommunication is too high, trust breaks down. But when there is miscommunication, it pays to be more forgiving.

When there is miscommunication, and uncertainty or doubt creeps in, it's better in the long run to tend toward giving the benefit of the doubt and away from assuming malice.

My key takeaways from playing with the simulation are:

First, in order to develop trust in your business relationships—in *any* relationship—you can't expect it to happen overnight. It takes time and effort. And you must be willing and able to put in that time and effort.

Second, in order to have solid, long-lasting business relationships, you must adopt a win-win attitude (and, of course, seek out others who have this attitude as well). This means developing skills in and tendencies toward using collaborative strategies and conflict resolution processes that aim to accommodate most if not all players/participants.

Finally, and perhaps most importantly, complete and accurate communication is essential. I've always thought—and this game appears to support me in this—that at the core of trusting and productive relationships is a mutual interest in communicating well (i.e., clearly, accurately) and often. This means both parties regularly take time to pause and confirm or correct their understanding of what the other is saying before acting on their assumptions.

And when there is miscommunication, and uncertainty or doubt creeps in, it's better in the long run to tend toward giving the benefit of the doubt and away from assuming malice.

Check out the simulation—you'll need about half-an-hour, minimum—and tell us what *you* learned from it.

http://ncase.me/trust/

Thanks, Joe Halpin, for the pointer to this!

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