Are You an Entrepreneurial Prisoner? Here’s How to Avoid the Prisoner’s Dilemma and Achieve More Success…
May 24, 2012 Leave a comment
There is an interesting game theory model known as the Prisoner’s Dilemma. The dilemma is illustrated as follows:
Two suspects are arrested by the police. The police have weak cases against both of them. So, here’s what they do…They hold the suspects in two separate cells. Then, they tell each that if they implicate the other, they will get leniency. If not, they are told, they will get harsh treatment.
What typically happens in this situation is that each prisoner decides to implicate the other in order to get a lesser sentence. As a result, the police end up convicting both suspects.
What is most interesting about the Prisoner’s Dilemma is that both suspects made rational decisions (the decision to implicate the other) based on the available information (which was that if you implicate the other you’ll get leniency, and if not, you’ll get harsh treatment).
But the problem was that the available information was lacking. The key missing information was that the police had a weak case. And, as a result, the better solution for the suspects would have been to keep their mouths shut, in which case, they both would have walked.
In business, this scenario often occurs, and unfortunately entrepreneurs often act as prisoners. For example, the entrepreneur who fails because they sought out bank loans and venture capital even though they weren’t ready for bank loans or venture capital, and they should have sought angel investors or friends-and-family funders.
Information and knowledge are the key. Entrepreneurs who lack the key information and knowledge become prisoners. They make perfectly rational decisions. But these decisions are often flat-out wrong because the information on which they made these decisions was flawed.
That is why the best entrepreneurs continuously invest in education. E.g., did you know that 40Billion provides informative business startup guides? In these quick startup guides, you’ll discover useful tips for:
- Funding your business through friends & family, angels, banks, and VC’s
- Writing a business plan in 13 easy steps
- Forming a company as a sole proprietorship, partnership, LLC, or corporation
- Managing cash flow so you don’t run out of money
- Protecting your ideas and intellectual property through patents, trademarks, copyrights, and NDA’s
Download the short MP3’s and listen to them on your computer or in your iPod, while at home, in the office, or on-the-go. Then, download the easy-to-use templates that come with each startup guide.
Go to http://www.40billion.com/startupguides/ and get educational tips to help you avoid becoming a prisoner.