Veritasium, an amazing YouTube channel, put out a video on optimal strategy for game theory. Watch it if you haven’t. If you like an interactive version, check out this website by Nicky Case.

The concept is simple.

In long term repeated games/interactions, the best strategies are:

  1. Being nice
  2. Being forgiving
  3. Being provokable (retaliatory or don’t be a pushover)
  4. Being clear (with your intentions and communication)

These are the optimal strategies to come out ahead, when the game you’re playing is repeated multiple times, and is not a Zero Sum game.

Like Business.

If you have partners in a business, you need to make sure that they make money, or else you won’t. Make sure your partners understand your intentions and incentives well. Don’t tolerate bad partners all the time, but forgive genuine mistakes.

This is easy to observe out in the wild.

Microsoft makes sure it’s distribution and service partners make money, and in turn they stay loyal to Microsoft. Same with Shopify. Same with Salesforce.

Twitter has betrayed its app developers multiple times, and you can see the ecosystem is now dead.

Of course the above strategies don’t work when both parties involved know that this game will be only played small number of times.

Touristy places are an example of that.

People there know that you’re not coming back, so they’re just trying to extract as much as they possibly can in the one interaction you are having.

This is why dealing with a Tour Agency is better for you. They have long term relationships with people in those places, so those people will give a better service to agency’s customers, otherwise they might end up not getting future guaranteed business.

Agencies have a brand of themselves, so it is in their interest to not serve you with a bad experience, else the brand gets tarnished, and people will not choose to work with them in future.

Similar games play out with moving houses. You move houses 3-4 times in your life (generally speaking). That’s a very small number of iterations, so Movers and Packers are notoriously bad service providers.

You should look to convert any interaction into a repeat interaction, that goes on for a long term, and that’s how you’ll end up getting better service/experience.