Answer to Question #151114 in Economics for kavisanka

Question

This game is not a prisoner’s dilemma. How would you change payoffs to let it become a prisoner’s dilemma?

Answer 1

The Prisoner's Dilemma (less commonly called the Bandit's Dilemma) is a fundamental problem in game theory that the players being used will not always cooperate with each other, even if it is in their best interest. It is assumed that the player (the “prisoner”) maximizes his own gain without caring about the benefit of others.

The core of the problem was formulated by Meryl Flood and Melvin Drescher in 1950. The name of the dilemma was given by the mathematician Albert Tucker.

In the imprisoned betrayal dilemma, cooperation strictly dominates, so the only possible balance is the betrayal of both parties. Simply put, whatever the behavior of the other player, everyone will win more if they betray. In any situation, in any situation, betrayal is more profitable than cooperation, all the players used will choose betrayal.

Behaving according to separate rationality, together the participants come to an irrational decision: if both betrayed, they will receive in total less gain than if they cooperated (the only equilibrium in this game does not lead to a Pareto-optimal solution). This is the dilemma.

In the repetitive prisoner's dilemma, the game happens periodically, and each player can “punish” the other for not cooperating earlier. In such a game, an equilibrium threat can be achieved (with an increase in the number of iterations, Nash tends to the Pareto optimum).