Current Business Climate: Berg’s Analysis of the RBE

R. W. Berg’s Competition and Cooperation: The Wisdom to Know When, she performed an experiment on a series of individuals by placing them through an exercise called the Red-Blue Exercise (refered to as RBE here on out). The purpose of this exercise is to “raise the participants’ awareness of the present state of the software of their minds” (Berg, 176). Note that this exercise is in many ways similar to the prisoner’s dilemma. Her conclusion from the experiment was that we as humans revert to defensive competition upon the anticipation of any threat to our “strongly held beliefs or to our perceived images of ourselves”(Berg, 187). She predicted that debriefing her participants after the study on four major factors: reflection, fair play, trust, and ethics should help us learn when to cooperate and when to compete. An extrapolation of her findings stated that the business world would benefit from the same reflection that participants of RBE undertook. I agree with this point as I feel it is necessary for changing the practices of big business in the US, however, a number of my classmates found error in the RBE and to an extent the conclusions drawn from it. I believe these errors are born from either misunderstanding of the purpose of the RBE or misinterpretation of the exercise itself. It is important to understand the purpose of the RBE in its given business context before understanding why it is so valuable for our businesses.


Jc saenz notes that changing the values within the point system could possibly alter the actions of the players and the results of the exercise. While he did numerically demonstrate that changing the values of the point system could obscure the results of the exercise, I don’t think this deconstruction of the point system detracts from the moral conclusions that Berg drew from her experiment. For instance, note the “Agreement to Cooperate Based Upon an Even Distribution of Resources” subsection, beginning on page 184. “Team B has demonstrated good faith by sacrificing its advantage over Team A… Team A has been reimbursed for its act of good faith… the teams are on an equal footing both numerically and morally.” We can see that the conclusions gleaned from this exercise draw from both the numerical and moral aspects observed. In this specific instance, both of the teams benefited numerically by coordinating their choices, however, these benefits are a reflection of the trust and cooperation between the two teams. When we look beyond the exact values of the point system, this example is conducive to the purpose of the RBE as it reveals that reflection on one’s actions increases mutual trust and increases benefit.


shawnpak critiques the “three problems” Berg has with the “it’s just a game mentality” and states that these contradictions undermine the conclusions of the RBE. Claiming that RBE is a contest because that is explicitly stated in the preface to the rules, is a misinterpretation of Appendix A and the administrator’s role in the exercise. The administrator never explicitly reveals the overall aim of RBE: “The aim of the exercise is for your group to end up with the highest positive score”. Additionally, the RED-BLUE EXERCISE subsection states that an administrator can simply tell the participants that RBE is an “exercise in team decision-making”. Personally, I feel the above comment in a business setting would entail cooperation, not competition.


His second argument that teams need not act as if there are later rounds because the rules provide a round maximum is rhetorically valid, however, this takes the restriction too literally. Berg wants to show us how the behavior the participants is applicable to the real world, where there are many more than 10 rounds.


Lastly, he states that since there are no real stakes, the participants have no motivation to treat the situation as an authentic business situation. I think this is a correct assertion and a blow o the comparison Berg made between the contrast Prisoner’s Dilemma and the RBE. Without any stakes, there really is no motivation to act ethically. However I argue that this is actually a huge advantage of the RBE because its conclusion’s become comparable to the current business climate where we find executives and managers not reflecting on their decisions and not acting in an ethical manner, all because their status entails a lack of personal stakes. When Berg states that “participants often seem to see a clear line between lying in a “game” and lying “in an real business situation”” my mind immediately goes to the 2008 financial recession. Ask yourselves, for the managers and executives of big banks, how was their situation unlike a game? They faced little to no personal consequences and their actions had no personal stakes. Look at the result of that. The RBE brings into question our instinctive actions in the context of a game. I believe this is important for understanding the actions of many of the current powerful financial figures that control so many aspects of our financial lives.


In summary, I agree that the RBE has limitations based on its simplicity and its point system, however, I felt the limitations that were argued were based on misunderstandings of the purpose of the RBE or misinterpretations of the exercise itself. My belief is that the RBE’s relevance, considering our current business climate, overrides these limitations and in some instances, is even strengthened by them.

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  1. In response to your critique of my 3 points:
    1) The aim is actually explicitly given to the participants, as can be seen in page 177 of the article, in the second paragraph. “There are always questions about the aim—whether the participants should be competing or not—and when this questions arises, simply repeat the aim of the exercise—”for your group to end up with the highest positive score.”” Even without this, the aim is clearly written on the instructions, which are given to the participants to read through. To me, it’s difficult to interpret this aim as one of a cooperative nature, rather than a competitive one. The wording appears to be quite clear: for YOUR group to end up with the HIGHEST positive score. I think they could’ve reworded it to be “with a positive score”; was having it be the highest necessary at all? In this way, it doesn’t connote a need to surpass the other team, merely achieving a positive score would achieve the aim.

    2) I think using it as an application to the real world exposes exactly the weaknesses of the conduct of this study. Yes there may be ‘Rounds 11 and 12’ in the ‘real world’, but the fact remains that there were not any such variables in this exercise. I see a team’s ‘betrayal’ in the last two rounds not so much as a ‘burning of bridges’ between the two groups, but a strategically planned move to make up the difference in points, and pull ahead to achieve the aim in the end. If there had been a ‘Round 11 and 12’, no doubt the participants would have reacted accordingly, and perhaps not reveal their intentions until that point. And as I mentioned in my response, there is no reason to think that the participants of the two groups harbored any ill will to one another after the exercise, given the relatively low seriousness of the exercise.

    3) Your point on the 2008 financial crisis is interesting to consider, and I do not disagree that the conclusions of the study can show some of the thought processes in business and finance. However, my argument is that the conclusions of the study itself do not have sufficient backing to be able to make that connection, as there are glaring limitations in the conduct of the study that I felt were not adequately addressed.


  2. Hello. Your value-oriented perspective is an interesting one to look at. While the aspects that you referenced about my arguments were the numerical ones, I want to discuss about the component of trust in this experiment, and how it could be looked at.

    In my article, I made reference to the real-world misrepresentation that was made by RBE in the fact that there could only be two conferences in it, none of which happened before the game began. Berg’s paper emphasizes the importance of trust in cooperation, and as you have stated, the moderator in this experiment doesn’t explicitly reveal the “real” aim of this exercise. Aren’t meetings in the real world be held to make sure all of the information is known by all of the participants? By not having real-world communication systems, the missing information leaves room for mistrust to be generated.

    My question to you is: Would one of the objectives of this experiment be to emphasize the importance of communication systems?


  3. @shawnpak you have definitely disproved my first point. I was unaware of that rule of the game. As for your second and third points, the fact that the participants view the exercise as just a game contributes to the applicability of this study to the real world, even if the game does not have the 11th and 12th rounds that Berg spoke of. When individuals see a scenario as just a game with no real consequences, they disregard ethical behavior in their decision making process and commit behavior only advantageous to themselves. The comparison I made between the 2008 financial crisis and the RBE draws less on the conclusions the study and more on the conditions of the study. Specifically, when individuals assume no consequences from a decision, they act out of self-benefit and with little consideration for the externalities of their decision.

    I feel that I should have emphasized that my connection between the study and the current business climate was based more on the conditions of the RBE and less on its conclusions. In its current state, my argument suffers from this because you did thoroughly explain the flaws in the conclusion of the RBE.


  4. @jsaenzpadilla1
    I strongly feel one of the objectives of this experiment is to emphasize the importance of communication systems. Berg gave examples on pages 181 and 183 where teams that defaulted on a cooperative agreement or chose not to cooperate at all, suffered a lesser score than what could have been achieved. On the contrary, examples of cooperative and ethical teams achieving higher scores are abundant throughout the paper. It is also conducive to my real world example that teams who cooperate, and therefore, consider the externalitites of their decision, also benefit more in the long run, along with society.

    Your analysis of the RBE’s differences from the real world is apt. However, if researchers such as Berg want to study a real world example of a phenomena, they simply perform a naturalistic observation. For example, sitting in on an actual business meeting or shadowing employees for some amount of time. The premise of experimental research, as opposed to naturalistic observation, entails that the maximum amount of variables are held constant in order to study a specific variable. Considering this definition, I feel that the experimental method used by Berg was the most efficient for the research she wanted to conduct.


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