Why is it so irritating to be nickel and dimed?
There is of course a financial aspect (you’re trying to take more of my money) and one of expectations (I might have paid $15 if you’d quoted me that, but you told me it was $10 and now you’re asking for $15).
But perhaps more important is the message you’re sending: a few extra bucks on this transaction is more important to you than our relationship.
In an extreme case, that behavior is completely rational (even if dishonest). If you weren’t well off and had limited future opportunities, you’d probably opt to “nickel and dime” Bill Gates for a million bucks.
In most real world cases, it’s a little more dubious.
Prisoner’s Dilemma, Over and Over
Everyone knows about the Prisoner’s Dilemma, in which the rational strategy for both arrested parties is to testify against their partner. This results in a situation where both men wind up worse than if they’d colluded and remained silent.
In this situation, the players only play the game one time, and almost inevitably wind up screwing one another over.
However, the optimal strategy in other variations of the game gets a lot more complex. If rather than just playing once, players play an unknown number of repeated games, a “tit for tat” strategy can be a very good one.
In a tit for tat strategy, a player starts off playing nice. He plays nice in subsequent rounds if his opponent just played nice with him, but he plays mean if his opponent just played mean with him. If both players adopt this strategy, they’ll wind up colluding and they will consistently help one another out.
Playing the Business Game Many Times
Business is usually both more enjoyable and more successful when your co-players expect to play the game repeatedly.
I can try to extract as much value out of you from you as possible for the thing I’m working on right now. That may mean taking your money, driving you to overwork yourself on my behalf, or getting you to do me favors. I’ll probably be better off tomorrow than I would have been, but you won’t trust me and I won’t be as well positioned the next time I play the game.
Or I can work with the expectation that we’ll play the game again: by doing a little more for you and asking a little less, you’ll treat me well in the future and we’ll both wind up better than we otherwise would have.
Oddly, those who likely have the most games in front of them — new professionals just out of school — are generally more likely to act like they’re only playing the game once. When I first started working, I didn’t have the experience of working with the same people at different companies.
Sure, I might have thought, I’m working with that guy now, but could I really have imagined that I would be part of his company or he of mine ten to twenty years down the road? Probably not: I didn’t fully internalize the importance of investing in relationships.
When, later in your career, you’ve had the experience of working with one person two or three times, you see the pattern. You realize that for any of your colleagues, this may not be the last time you work together.
LinkedIn is, at its core, an embodiment of the importance of ongoing professional relationships. Keith Rabois recently mentioned that an amazing five of LinkedIn’s first twenty-seven people (Keith, Lee Hower, Reid Hoffman, Josh Elman, and Matt Cohler) are partners at VC firms; in large part, that’s because each plays the game collaboratively, with the expectation that there will be many future iterations. Keith, Lee, Reid, Josh, and Matt are all in it for the long term.
It’s very easy to adopt a mentality that prioritizes the thing that’s in front of you. In business, that often manifests itself as a get rich quick scheme.
If your goal is success right now (screw the future), you can spend time with the nickel-and-dime, get-rich-quick types. If you’re interested in the longer term, I suggest working with people like Keith, Lee, Reid, Josh, and Matt.