How to Measure the Value of Collaboration

clipped from wikinomics.com

Since we are also scientists of business, we tend to come at this question from a scientific viewpoint. Want to know the value of collaboration? – then simply contrast the value of the collaborative firm versus that same firm in the absence of collaboration.

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The question of “added value” in cooperative settings has been addressed exhaustively in the science of Game Theory. Here, economists use stylized examples to illustrate cooperation and competition in quantitative ways. One of the classic examples is called The Prisoner’s Dilemma.

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In an ideal world, they would compare their strategies and pick the value maximizing choice – to remain silent. Therefore one could argue that the economic value of collaboration is the difference between the two cases ‐1 – (‐5) = +4; +4 X 2 prisoners = 8. Therefore the prisoners created 8 positive years of value between them by collaborating.