The ‘discovery’ that human beings are often irrational, and not utterly logical ‘econs’, was popularised in 2008 by the book ‘Nudge’ – but behavioural economics, and its fellow discipline behavioural science, has been around for many decades.One early examination of human decision making was explored in the ‘game theory’ branch of economics, which started to get really interesting for those of us interested in human cooperation when the Prisoner’s Dilemma was first posited (originally in 1950). This shows why two individuals might not cooperate, even if it appears that it is in their best interests to do so.
Actually of course in real life, human beings often do cooperate; even in ‘Prisoner’s Dilemma’-style situations, as pointed out by my 10 year old son:“What are you reading Daddy?I’m reading about the Prisoner’s Dilemma. It’s where 2 people are caught stealing something, but the police only have evidence to send them to jail for 1 year. So the police say: if you snitch on the other guy, you will only get 6 months – and he’ll get 5 years. What should you do?Can you talk to each other?No, you’re in different cells.Do you know the other guy? Like have you stolen things with them before, are you in a gang together?I don’t think so – I think you should imagine you don’t know each other.Well that’s silly. I wouldn’t go out robbing with someone I didn’t know already. Anyway, you don’t snitch. Everyone at my school knows snitching is bad.”
The point is – in real life, you probably know the other person or get to know them; there are probably open channels of communication; and you may well have already agreed to behave in certain ways before the moment happens when you have to decide. Of course, you do have to rely on trust at some point.Game theory has grown up a lot in the intervening decades since 1950, and has hundreds of modern applications. Good examples of non-cooperation include drug cheating in sport, or a nuclear arms race. But theories have also been developed to explore how cooperative behaviour might be encouraged, and in its modern application might well be very helpful for a local authority chief executive seeking to excerise system leadership across the public sector.
The emerging consensus around local government’s future points to a more collaborative approach to public service delivery – either with other local agencies or citizens themselves. Not only is this driven by our desire for better outcomes and resilient communities but also because there is no other way to create a financially sustainable local state. In a new synthesis of public administration, Jocelyne Bourgon made clear that governments must evolve to meet the challenges of complex social systems in the 21st century. Her core analysis, does not cite spending pressure as a driver for this change: instead there is something more pervasive about the evolving complexity of need and the necessity for collaboration that she acknowledges. The real challenge confronting local government is not its finances but a lack of local cooperation. How do we bring partners locally together to do things that do not serve their immediate self-interest, but instead their future self interest?
In trying to help local government answer this question I undertook some research at IMPOWER in advance of this year’s MJ Future Forum. I looked at leadership volatility through chief executive tenure and political turnover. I also analysed ten major council transformation programmes over the last twenty years. The significant insights are that in last thirty years average chief executive tenure has halved, whilst the average political turnover per decade has tripled. Also, when assessing major transformation programmes those who have been most successful have not actually created change as a direct result of leadership action but rather, leadership has identified early pre-existing change in motion, co-opted it, built a brand around it and scaled it across their organisation. As we’ve already established, the new challenge is to do this externally with partners. But to make it work, we need to find a way we can all win.
Robert Axelrod’s seminal work in 1984 (The Evolution of Cooperation) based insight on a real life tournament using computers playing the prisoners game, with multiple players, learning and varying settings for other key attributes. He discovered that greedy strategies tended to do very poorly in the long run while more altruistic strategies did better. The strategy proven to be the most successful in the long run (measured by benefit to yourself – i.e. a selfish strategy) is as follows:
Nice strategy – The strategy must be “nice”, that is, it will not defect before its opponent does (this is sometimes referred to as an “optimistic” algorithm). Almost all top-scoring strategies are nice; therefore, a purely selfish strategy will not “cheat” on its opponent, for purely self-interested reasons first.
Retaliation strategy – However, the successful strategy must not be a blind optimist. It must sometimes retaliate. An example of a non-retaliating strategy is Always Cooperate. This is a very bad choice, as “nasty” strategies will ruthlessly exploit such players.
Forgiving strategy – Successful strategies must also be forgiving. Though players will retaliate, they will once again fall back to cooperating if the opponent does not continue to defect. This stops long runs of revenge and counter-revenge, maximizing benefits.
Non-envious strategy – The last quality is being non-envious, that is not striving to score more than the opponent (note that a “nice” strategy can never score more than the opponent).
In my experience, most local authority chief executives are naturals at employing these strategies. They are taking advantage of the more liberal policy environment to create the space for cooperation with local partners. However, many of the examples of cooperative behaviour tend either to be at a small scale (so failure doesn’t matter so much) or they are paid for by central government (e.g. the Better Care Fund, or the Troubled Families programme). What Chief Executives need to move towards is a situation where the collaboration is both substantive (it makes a real difference and would be painful to exit from) and funds itself (e.g. it invests successfully in prevention in order to save money from core budgets). This implies cooperation becoming a core sustainability strategy for the authority – rather than something that is a nice to have on the side.
These are big bets – but credibility, consistency, openness and transparency are crucial traits for a negotiator employing game theory. I can’t see any other route for local authorities with core budgets reduced by up to 40% – sustainability in a complex system means cooperation.
Jon Ainger, Director, IMPOWER
This article originally appeared in The MJ