This book was published in the year 2006 . The book, Games Indians Play, is essentially a game theoretic approach to analyzing the collective behavior of Indians. In this book, moving away from finance, he uses game theory and behavioral economics to analyze the collective behavior of Indians. Using the most basic concepts of game theory as developed by John von Neumann, Oskar Morgenstern and John Nash, the author examines the individual versus the collective behavior of Indians and its implications for public infrastructure in particular and for the quality of life in India, in general. He contends that Indians pursue selfish strategies and are highly corrupt and demonstrates how this prevents us from facing the challenges to our society today. The book presents an analysis of how our common behavioral traits are preventing us from reaching the efficient equilibrium of a developed society. The author talks about the ‘Indian-ness’ of Indians, by which he means behavioral traits like throwing garbage anywhere with gay abandon, or spitting with a free will, or tearing pages from library books or leaving public toilets dirty or not stopping cars when senior citizens are crossing the road or not taking a stand against social ills or jumping queues, etc. The book is an attempt to explain these peculiar behavior traits, of maximizing private utility with little regard for social utility, in the framework of game theory.

1. Some Impressionistic takes from the book
Dr. V. Raghunathan’s
“ Games Indian Play”
by Ramki
Ramaddster@gmail.com

2. V.Raghunathan’s first career was an academic- as Professor of
Finance at IIM- Ahmadabad for nearly two decades, until early 2001.
His second – a corporate one- started in 2001, first as President ,
ING Vysya Bank for four years and then with GMR Group- an
infrastructure major. He is currently CEO, GMR Varalakshmi
Foundation . Also since 1990 he has been an Adjunct Professor at
the University of Bocconi, Milan, lecturing on behavioral finance
 Has published over 500 academic papers & popular articles & a
dozen books
 Author of the best-seller ‘ Games Indian Play’ – why we are the
way we are ( Penguin 2006)
 Held guest column in ET, Mint, and other national dailies, and is a
busy public speaker
 Has probably the largest private collection of old locks in the
country , a cartoonist with a national daily, has played chess at all
India-level
About the Author

3. Most of us would have heard this statement – “What can I alone do about this
or that the situation?” Or
“But everybody is doing it. My action alone is not going to change the
situation?”
The above response could fit many situations in India like:
 Why do you bribe a govt. official / middle man / or for that matter anybody
to get work done?
 Why do you jump red lights ?
 Why do you throw garbage just outside the house or on the street?
 Why do you spit on the road/wall?
 Why do you accept an injustice happening in full public view and do
nothing about it?
There are umpteen such situations where “What can I alone do” syndrome
paralyzes action amongst Indians. - Read this …..
Happy Reading
Prelude

4. Why are We the way We are?

5.  Why is our public hygiene so porcine?
 Why do we spit with a free will?
 Why does someone tear off a page or two from a library book?
 Or, Write our name on The Taj Mahal?
 Or, Toot horn in residential locality, even at 4 am?
 Or Leave a public toilet smelling even though when we enter we want a
clean toilet?
 Why do we run the tap full blast while shaving even though we are
aware of water-shortage?
 Or, routinely jump out of the seat in mad rush for the overhead baggage
even before the aircraft comes to a total halt?
 Or, Don’t board the aircraft in an orderly manner, when asked to board
by row numbers?
 Why don’t we often vote?
 Why don’t we stand up to or retaliate against indiscipline or social ills?
 Why do we jump red lights in traffic
Not Who but Why ?

6.  Low Trustworthiness
 Being privately smart & publically dumb
 Fatalist outlook
 Being too intelligent for our own good
 Abysmal sense of public hygiene
 Lack of self-regulation & sense of fairness
 Reluctance to penalize wrong conduct in others
 Mistaking talk for action
 Deep-rooted corruption & a flair for free riding
 Inability to follow or implement systems
 A sense of self-worth that is massaged only if we have “
authority” to break rules.
 Propensity to look for loop holes in laws
12 Canons of Indian-ness

7. This is how we queqe

9.  1956 Kilometers long – 5072 meters above sea level
 Across Tibet’s snow-covered plateau
 550 kms frozen belt – freezing & melting in seasons
 Workers had to use bottled oxygen
 Not even a single death during construction
 Stretch of 1142 kms completed in 4 years

10.  Trans rapid Maglev between Shanghai Airport & downtown
 Completed less than two years
 Takes 8 mins to airport – 430 kms speed
 Travel distance 30 kms
 8 international patents in High tech girders.

11.  760 kms –Konkan Railway – 7-10 years to complete
 Delhi Metro – 1950-1990- 30 feasibility studies
 Final go ahead in 1990
 DMRC established in 1995
 First phase 11 kms completed in 2004
 18 Km Calcutta metro took 24 years to complete – 1974-1995

12. Why are we a Nation that is individually
so Smart & collectively so naive ?

13.  According to the author, earlier analyses of Indians, by
authors and observers like Naipaul & Richard Nisbett, made
observations about Indians’ behavioral traits but have not
explained them.
 He then explores several possible explanations for these
peculiarly Indian behavioral traits, like the climate, population
density, poverty, level of illiteracy, genetic coding, colonial
past, etc.
 Giving contrary evidence, he eliminates all these possible
reasons and thus lays the ground to try and explain these
behavioral traits through an altogether different approach,
namely game theory.
To Sum up this Chapter

14. On Intelligence & Rationality

15.  Behavioral economics deals with the rationality & irrationality of
human beings: that we are not purely economic animals…that
we have other sides to us that make us behave in the way we
do.
 Reading through a gamut of related topics like the Prisoner’s
Dilemma, Game theory & so on, these things are read
mathematically, everybody studies them but not many apply this
to the day-to-day behaviour.
 Things that appear very rational in the short run may not be so
rational in the long run.
 Look at our behavior: We seem to drive with the sole objective
of getting home sooner than others; not even giving way to the
old, women or children even on zebra crossings, but in the
process we create a traffic mess; Millions of us think it smart to
avoid investing in a toilet and prefer the open skies for
defecation; and so on.
Theory & Reality

16.  Why is it that we do not exercise any degree of self-
regulation.
 We keep thinking and agonizing over these things because
we are also the sufferers
 We will soon see that we do not have to fall back on higher
values like ethics, correct behaviour or other higher values
to decide on what the appropriate behaviour in a society
should be.
 We will also see that even if we assume that all of us are
supremely selfish, it should be possible to show that we
would still do better to cooperate.
Theory & Reality

17.  Let us consider the Prisoners’ dilemma. There are two accomplices in some
suspected crime, who are caught by the law. Both prisoners are assumed to
be entirely selfish, in that each wants to minimize their sentence. The law
puts them in separate cells, leaving them incommunicado. Each is offered a
plea-bargaining opportunity. If one cooperates with the law (that is sings on
the accomplice), one will go scot free while the other will get 5 years behind
bars. If neither sings on the other, each gets only 2 Years. But if each sings
on the other, each gets 4 years.
 Each argues that it is always better for one to sing on the other, because if
the other sings, one is better of singing too, because otherwise the other
goes scot free while one gets 5 years in the jail. On the other hand, if the
other is not going to sing, even then one is better off singing, because then
one gets home free, while the other gets 5 years (after all, one is meant to
be selfish). Each argues identically and ends up singing on the other so that
each gets 4 years, while had they cooperated, each would have got away
with 2 years.
 This is what we meant by saying, even if we are absolutely selfish, it pays to
cooperate.
Prisoner’s dilemma

18.  Rational thinking & Intelligence go hand in hand.
 Indians are second to none in the world in intelligence.
 For example
 Kids doing rapid fire mental maths.
 Waiter in the dhabha taking orders from half-dozen
customers in different tables, and serving with no
mistakes.
 Roadside mechanics solving complex mechanical
problems at extremely low costs.
 The problem is that we use much of our intelligence trying to
figure ways to circumvent every law, regulation and norm in
a bid to do better for ourselves; the other be damned.
We are Intelligent & Rational

20.  This chapter examines the issues of intelligence & rationality.
 Game theory & all of economics assumes that man makes rational
decisions while making choices.
 The contention is that Indians too are rational but they are rational
only so far as it concerns their own individual selfish motives.
 They are like the two prisoners in the once for all Prisoner’s
Dilemma, where we see that the two prisoners only act for their
own benefit and not for their joint benefit.
 Giving the example of an apartment building, that the people on the
ground floor are reluctant to pay for the lift repair & people on the
top floor are reluctant to pay for garden maintenance with the result
that the building looks decrepit in no time at all.
 As the desired equilibrium or goal is co-operational, he poses an
important question at the end, namely whether Indians can, with
their selfish behavior, still reach the desired outcome of each
player choosing co-operative behavior.
To Sum up this Chapter

21. Prisoner’s dilemma & We the Squealers

22.  This was first developed by researchers at the Rand Corporation during the
1950s.
 A concept that has come to occupy a prominent place in game theory.
 The problem statement goes like this:
 Assume that Henry and Dave are accomplices in a crime.
 Each of them is coldly rational and supremely selfish, in that each wants want
the least sentence for himself.
 Each is being interrogated in two separate cells, and the two cannot
communicate with each other.
 The interrogator tells each that he has enough evidence to put each of them
away in the slammer for two years.
 However, if one of them squeals on the other and helps him prosecute his
accomplice, the interrogator will set him free immediately and imprison the
other accomplice for five years.
 He also states that he is making an identical offer to the other accomplice
(though the two cannot communicate).
 If each of us betrays the other, he will put both away for three years.
 Being selfish and rational, what should Henry and Dave do so that their self-
interest is best served? That’s the dilemma…
The Prisoner’s Dilemma

23.  Dave Argues thus:
 If Henry is going to rattle on me, I am better off rattling on him
(why should I let him go scot free and serve 5 years in the
slammer?)
 If Henry is not going to rattle on me, I am better off rattling on
him (that way, I go scot free and he gets 5 years; after all one is
supposed to be extremely selfish, right?)
 So no matter what Henry does, I am better off rattling on him.
 And Henry in his cell argues exactly the same way in his mind.
 So both Dave and Henry end up rattling on each other and
each ends up getting 3 years, while each had the opportunity to
get away with only 2 years had they not rattled on the other.
 This is what we meant by saying that even if each is supremely
rational and selfish, it pays to cooperate with each other.
Dave & Henry -The Prisoner’s Dilemma

24. Dave & Henry -The
Prisoner’s Dilemma
4

25.  Carrying the same metaphor further, the author casts the
discussion in format of the classic prisoner’s dilemma to argue how
the desirable choice from the point of view of both parties is co-
operation -co-operation (co-op-co-op); but how each one due to
selfish reasons gives in to defecting or not adopting co-operative
behavior.
 He cites various examples like of exporters sending faulty
consignments, adulterated food products such as apples, chilly
powder, etc., to prove his point.
 These instances are presented in Game Theoretic framework –
The author further argues that Indians use their razor sharp brains
to ensure that they follow the strategy of defect hoping the other
party follows the strategy of co-operation, expecting their own utility
to be maximized.
To Sum up this Chapter

26.  The author says that by doing so they maximize their short run
utility at the cost of long run utility, defined as moderate but
continued gains
 That our individual planning horizons are generally short,
leading to pursuit of quick profits and outcomes and
consequently erratic & transitory rather than based on sound
long-term development, is an important undeveloped
development paradigm.
 Since as a people we are all short-term oriented, all of us act
privately smart, but publicly dumb, as manifested in shoddy
buildinga, poor and dirty roads, garbage-ridden cities, corrupt
people etc, leading to a sub-optimal society.
 Author contends that Indians are adept at justifying this
“defecting’ behavior by the argument that one person not
defecting is not going to make a difference: The ‘What can I
alone do?’ syndrome.
To Sum up this Chapter

27. Iterative Prisoner’s dilemma & Gentleman strategy

28.  The example earlier was that of a one-time Prisoner’s
Dilemma.
 But in real life, often we tend to deal with the same people or
parties over and over again, even though ,we may interact
with hundreds or thousands of parties over our lifetime. This
is akin to an iterative Prisoner Dilemma like situation.
 The question then is, under iterative PD situation, what is the
best strategy for one to derive maximum utility from the
interactions, assuming for example, when two parties both
cooperate with each other, each derives a utility of 2; when
one cooperates and the other defects, the defector gets 5
points while the cooperator gets -1 (because it stings to be
cheated). But when both parties defect, neither gets any utility
points. ?
The Iterative PD

29.  To illustrate what works best, the author borrows from the work of Robert
Axelrod, the well known game-theorist.
 The author assumes a simulated situation where say, a 1000 people are
put in a room, moving about at random and meeting people. With each
individual they encounter, they exchange a slip, which says C or D (for
Cooperate or Defect). If two people exchange a C-C slip, each gets 2
utility points; if one gives a C while the other gives a D slip, the
cooperator (one who gave C slip) gets -1, while the defector (D slip) gets
4; and if both play D-D, each gets 0. So players keep moving about and
meeting other people at random (they may meet new people or the same
party again and again, as it happens in real life as well). The objective is
to maximize the utility points for oneself.
 So which strategy would work the best? For instance, Is it not better for
me to defect often and pocket 4 points and collect more and more points
to maximise my utility? (After all we are assuming ourselves to be
selfish).
 This situation is what has been simulated by Robert Axelrod which the
author builds upon.
The Iterative PD

31.  Many strategies are possible. For example, one may be very uppity and say if
someone gives me a D, when I have given him a C, I will NEVER AGAIN
interact with him. Another idealistic may say he would always give two
chances to the other to defect, before taking corrective action. A third may
have the strategy of usually being a cooperator, but defecting say 5% or 10%
or 20% of the times at random to reel in those 4 points and maximize one’s
utility points.
 The author recalls Anatol Rapaport’s winning strategy submitted in Robert
Axelrod’s competition, was the simplest strategy of three words, namely ‘Tit
for Tat’ (TFT).
 The TFT strategy is simple: Never be the first ever to defect; thereafter, do
exactly what the opponent did the last time.
 In other words, you should always start with cooperation and continue
cooperating till the other defects, say in the 4th interaction. Then when you
come to interact with him the 5th time, remember what he did last time, and if
he had defected in move 4, you should defect in move 5. But if he against
cooperates in move 5, then you again cooperate in move 6 and so on.
 The explanation is very lucid & is illustrated with many day to day examples.
To Sum up this Chapter

32. Can Competition Lead to Cooperation

33. Crabs in the Bucket
 We equate ourselves with crabs in a bucket from where no crab would escape
since any crab trying to get out of the bucket is sure to be pulled down by others
inside.
 It is a reflection of dissatisfaction with others doing better than ourselves.
 We are perfectly happy if they do as badly as us, but cannot accept others doing
well.
 We want parity with our neighbor or our competitor, no matter how ?
WE

34. IPD & TVS
 The rest of the book contains many examples from day to day
life, as well as observed responses to behavioural economic
questions by Indian students vis-à-vis students from other
countries.
 According to the author:
 Indian students have been found less willing to penalize
somebody for wrong doing, if it involves the slightest cost to
oneself, while a greater percentage of students internationally
were willing to go the extra mile to punish a wrong doer.
 Similarly, Indian test subjects showed a relatively greater
propensity for free riding, and hence perhaps corruption
 We are less likely to follow systems
 We are weak in self-regulation
 We often tend to be less fair in our dealings, and thushence
less caring of others

35. The Game Theory & Gita

36. Game Theory & Gita
 The application of game theory to moral and political science.
 Game theorists take the view that a self-policing social system
must be a Nash equilibrium in which each player is
simultaneously making a best reply to the strategy choices of
the other players, which is typically sub-optimal.
 But optimality can be achieved if the action under a game
theoretic situation is driven by the Hindu notion of dharma
 When both parties play by the rules of dharma, the Equilibrium
achieved is truly optimal for both.

37. Game Theory & Gita
 Karmanye Vadhikaraste, Ma phaleshou kada chana – You have the
right to perform your actions, but you are not entitled to the fruits of the
actions.
 Ma Karma Phala Hetur Bhurmatey Sangostva Akarmani – Do not let
the fruit be the purpose of your actions, and therefore you won’t be
attached to not doing your duty.
 The author argues that Co-operation or dharma must be the correct course
of action, as it entails the larger good of all.
 Defection must be adharma (betrayal of duty) as it collectively entails a
greater punishment.
 More adharma in the society – the more collective suffering in the society,
and hence sub-optimality.

38. Game Theory & Gita
Yoga-sthah kuru karmani sangam tyaktva dhananjaya siddhy-
asiddhyoh samo bhutva samatvam yoga ucyate
The meaning
Be steadfast in yoga, O Arjuna. Perform your duty and abandon
all attachment to success or failure. Such evenness of mind is
called yoga.
This equanimity is what resolves Prisoner’s dilemma, leading both
parties to cooperate with each other.
If at the verge of doing the right thing, that is, taking the decision to
cooperate, one keeps an eye on the possibility that the other may
defect causing “ loss” is to oneself, one is no longer committing
oneself to action without attachment.
A true Karmayogi just does the right thing, that is, cooperates and
moves on, irrespective of what the other might do. But yes, when
you meet the ‘adharmi’ the next time, you show your anger by a
proportionate and judicious retaliation.

39. Tasmad asaktah satatam karyam
karma samacara asakto hy acaran
karma param apnoti purusah
Game Theory & Gita
Without being attached to the fruits of activities, one should act as a matter of duty, for
by working without attachment one attains the Supreme

40. Game Theory & Gita
 The root of the evil is the temptation that leads to the sub-optimal
decision.
 Action fired by wisdom is wiser & will achieve the highest good of all.
 Means are above the end – If the means or actions are just &
honorable, the end takes care of itself.
 If end alone tempts you & fires your desire, you are bound to commit
actions that do not ensure the end you are striving to achieve, as we
see in the Nash Equilibrium of Prisoner’s Dilemma.
 True to Prisoner’s dilemma .
Not to open water tap fully while shaving
Not to jump the red
light in traffic
Not to pollute
environment

41. The Last word
When we jump a queue or a red light, or throw that garbage on
the sidewalk, we are taking a rational ‘defect' decision, since it
seems to get us ahead of others or make life easier for us.
Here we are being privately smart, as the individual prisoner’s
in the dilemma.
But then, as others are no less rational, intelligent and smart,
they too start squealing for the same reason and before we
know it, we have unruly traffic, filthy streets and stinking
urinals. So collectively we are all come out collectively or
publicly dumb, just as the two prisoners taken together in the
dilemma.

42. Happy Reading
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