The Evolution of Cooperation

Last night I had a spirited discussion with some friends about US politics. One of our friends was expressing a concern that historically the US has been too “nice”, hopeful, helpful. We have created a culture people want to enjoy, but now we will be taken advantage of and ultimately destroyed. We need to be tougher and not be pushed around. I am not sure I would characterize the US as being “too nice”, but I contest that being collaborative is a liability.

My counter argument is that people are made to collaborate, and maximum value comes when people work together rather than engaging in a winner take all competition. It’s possible for a nation to be collaborative but still thrive even when facing bad actors.

The theoretical underpinnings of this viewpoint comes from game theory which is extensively discussed in the book The Evolution of Cooperation by Robert Axelrod. For people who aren’t into books, Leon Seltzer’s article The prisoner’s dilemma and the “virtues” of tit for tat provides a good summary. My super short summary: in a world ruled by selfishness with no central authority or rule, enlightened self interest can lead to effective cooperation in any situation where the participants believe that they will need to interact with each other in the future. In situations where there will be multiple interactions Tit for Tat ends up having the best long term payout. The algorithm is simple. Start by cooperating, and then mirror back the behavior of your competitor. That means “discipline” bad actors, but also “forgive” them if they are willing to cooperating. [A slight variation has a small random probability of cooperating even if the competitor has defected which can break retaliation cycles.] Axelrod found that when facing numerous other algorithms, some of which were designed to take advantage of “cooperative” partners, that tit for tat consistent had the best over all returns when playing in multiple round competitions.

I believe that silicon valley culture is a great example of how this works. In the mid of the 20th century, there were several places that arguably were better positioned than silicon valley to dominate the technology landscape. For example, the Boston area had more capital and a larger educated workforce. Unfortunately for Boston, they also had non-compete employment contracts and people and institutions which were not inclined to collaborate with competitors.

The former dean of Stanford’s School of Engineering Fred Terman was instrumental in shaping the Bay areas technology landscape to be an open system which welcomes people in and encourages collaboration. A great example of this culture can be seen in the early days of semi-conductors. Competitors gathered weekly at the Wagon Wheel to swap stories and brag about their successes. Sharing took away some competitive advantage, but everyone benefited because really hard problems only had to be solved once, and everyone could move on to the next challenge.

There’s a specific story which I love from when Intel was a young startup. Intel was betting the company’s success on a new chip. The chip looked good in prototype form but when they went to mass production the yield rate was extremely low. They spent several months trying to figure out what was going wrong. They couldn’t figure it out. In desperation they shared their difficulties with others at the Wagon Wheel. Engineers from Fairchild, arguably Intel’s biggest competitor of the day offered to help if Intel would provide the beer. The engineer sat down discuss the issue. In the end the engineer’s from Fairchild laughed and said ask the women working on the line to stop using hairspray. Intel did as requests and their yield rates became viable. It turns out Fairchild’s engineers had chased almost an identical problem for a year before they finally narrowed it down when their yields became acceptable when one of their women was away from the line for several days. The hair coverings both teams were using weren’t fine enough to contain the micro particles from the hairspray escaping.

For more stories and analysis, check out Steve Blank’s secret history of silicon valley. Technology Review Article Silicon Valley Can’t Be Copied is one of the best articles summarizing what has made the bay area so unique and the home of so many successful startups and Anna Lee Saxenian’s book Regional Advantage identified many of the same characteristics nearly twenty years earlier.

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