Game Theory, Relationships, Entrepreneurship
Let’s divide games into two categories for the sake of this discussion, games with perfect information and games with imperfect information.
Chess is an example of games with perfect information. You can see all the squares and pieces, all the time.
Texas Hold’em Poker is an example of games with imperfect information. Each hand involves two hidden cards held by each player.
Most real world transactions resemble closer to the games with imperfect information than to the games with perfect information.
Relationships
Consider the following question about relationships on Quora.
“If a girl appears to dislike me while texting, but shows with her body language she does like me, then what do I conclude?”
This is a typical example of an imperfect information game. This person tries to reach perfect information, hence the question “what do I conclude.” The answer is you can’t reach perfect information in this situation.
Perfect Information Doesn’t Exist in a Chaotic World
We all have various subpersonalities in our psyche, and once in a while, those subpersonalities conflict with each other.
The woman mentioned in this question might be attracted to him on an emotional level, hence the affirming body language. However, she seems to dislike the idea of romantic involvement with him on a mental level, hence the negative texting.
Looking at the clues and analysis above, one can’t have a conclusion. Most probably, she doesn’t have a conclusion either. At one moment, she’d say that she isn’t interested and rationalize it with some convincing reasons. At another moment, she’d feel rapport with him.
When she can’t come to a conclusion, how can he? It’s impossible. Therefore, he has to move forward without perfect information.
This is not only relevant to him and to this situation but to all of us in most critical situations in our lives. We won’t have perfect information most of the time.
Proceed without Perfect Information
What he can do here is to make a step forward toward his goal even in the face of imperfect information. Make an offer to the woman and see if she accepts it or not. This can be asking her for a date.
If she accepts the offer, keep taking steps toward the goal, which can be a stable relationship, like marriage. If she refuses, then he has to deal with the pain of rejection.
That means he has to take action in the face of two possible results, the achievement of a goal or the pain of failure. That takes some courage. The alternative is to stay in limbo forever.
Even though staying in limbo seems to be less painful than the pain of failure, failing once and dealing with it is much less painful than the constant low-intensity pain of limbo. It’s always better to take calculated risks and fail than to do nothing and get stale.
What Does All of That Have to Do with Entrepreneurship?
Entrepreneurship by definition involves imperfect information. No matter how many market surveys you make or big data analysis you do, there’s always a risk of failing. You can never reach perfect information.
That means you need to boil down your possible outcomes into two options, a success scenario and a failure scenario. The chance to fail is always there. Therefore, you need to accept it and embrace it.
One way to mitigate the risk of failure is to ask yourself what the secondary benefits are even if you failed. Lewis Schiff calls these the cherry on top in his book Business Brilliant. Your cherry on top can be more experience, extended network, and even a new idea for another business venture.
Summary
Unlike chess, most real-world games, like relationships and entrepreneurship, involve imperfect information. Therefore, a game like Texas Hold’em Poker with hidden cards provide a better analogy for real-world games.
When faced with a challenge due to imperfect information, the knee-jerk reaction is to try to get more information. This is reasonable to some extent, but in a chaotic world, perfect information is impossible.
What it all comes down to is to boil down the possible outcomes into two scenarios, a success scenario and a failure scenario.
You need to embrace the failure scenario fully and then move on and act anyway. That’s the only way to get out of limbo and to create an opportunity to succeed.
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