Prisoner's Dilemma & Beach Kiosk
Short Paper: Week 6
Prisoner’s Dilemma and the Beach Kiosk Game
The Prisoner’s Dilemma is a mathematical game theory that refers to a game in which the payoff from playing the dominant strategy is not the highest payoff possible and illustrates how self-interest can lead rational individuals and companies to pursue a course leading to mutual self-destruction, even when that destruction is foreseeable or in the case of companies certain decisions could have financial impact for better or worse. It seems that the Prisoner’s Dilemma impacts the many small decisions we consider making. The dilemma provides the logical framework for many situations we face every day in real life. Whether we're competitors conducting business, spouses negotiating understandings our choices are reflected by the prisoner dilemma’s model. The two parties involved will often be better off as a pair if each resists the temptation to go it alone and instead cooperates with or remains loyal to the other person. Both parties' pursuing their own interests exclusively leads to a worse outcome than does cooperation. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals and arises when all rivals possess dominant strategies, and when both rivals use their dominant strategies, they are worse off than if they had cooperated in making their decisions.
The following is the famous scenario (then I’ll share some examples) known as the Prisoner’s Dilemma: Two suspects: Vinny & Tony are arrested by the police. The police have insufficient evidence for a conviction, and, having separated the prisoners, visit each of them to offer the same deal. If one testifies for the prosecution against the other (defects) and the other remains silent (cooperates), the defector goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge.
Prisoner’s Dilemma and the Beach Kiosk Game
The Prisoner’s Dilemma is a mathematical game theory that refers to a game in which the payoff from playing the dominant strategy is not the highest payoff possible and illustrates how self-interest can lead rational individuals and companies to pursue a course leading to mutual self-destruction, even when that destruction is foreseeable or in the case of companies certain decisions could have financial impact for better or worse. It seems that the Prisoner’s Dilemma impacts the many small decisions we consider making. The dilemma provides the logical framework for many situations we face every day in real life. Whether we're competitors conducting business, spouses negotiating understandings our choices are reflected by the prisoner dilemma’s model. The two parties involved will often be better off as a pair if each resists the temptation to go it alone and instead cooperates with or remains loyal to the other person. Both parties' pursuing their own interests exclusively leads to a worse outcome than does cooperation. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals and arises when all rivals possess dominant strategies, and when both rivals use their dominant strategies, they are worse off than if they had cooperated in making their decisions.
The following is the famous scenario (then I’ll share some examples) known as the Prisoner’s Dilemma: Two suspects: Vinny & Tony are arrested by the police. The police have insufficient evidence for a conviction, and, having separated the prisoners, visit each of them to offer the same deal. If one testifies for the prosecution against the other (defects) and the other remains silent (cooperates), the defector goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge.
References: Keat, P.G. & Young, P.K.Y. (2009). Managerial economics: A brief review of important economic terms and concepts, P11, Pearson Education, Inc., Upper Saddle River, New Jersey,07458.