Prisoners Dilemma Key Terms Game theory The analysis

Prisoner’s Dilemma

Key Terms • Game theory – The analysis of strategies for dealing with competitive situations where the outcome of a participant’s choice of action depends critically on the actions of other participants. • Social dilemma – A situation in which an individual profits from selfishness unless everyone chooses the selfish alternative, in which case the whole group loses.

Scenario There are two suspects arrested for a crime: Henry and Dave. They are locked away in separate rooms, with no means of communicating with one another. The police interrogating the suspects offer the same deal to Henry and Dave. The possibilities available to Henry are as follows: 1. Henry confesses and implicates his friend Dave. Henry's sentence will be either: • 5 years in jail, if Dave also confesses independently (Dave's sentence will also be 5 years) • 0 years in jail on a plea, if Dave does not confess (but in this case Dave will get 20 years) 2. If Henry holds out and does not confess or implicate Dave his sentence will be either: • 1 year in jail on a reduced charge, provided Dave holds out as well (thus no confession from either) • 20 years in jail, if Dave confesses and betrays Henry • The same possibilities apply to Dave as well.

What is an appropriate matrix describing the described scenario? This matrix should include the possible actions and outcome.

Prisoner’s Dilemma Matrix

Discuss the following: What are the implications of the prisoner’s dilemma? What do you think is the right choice for the prisoners to make? What would you do if you were one of the prisoners. What are difference scenarios where we can apply game theory?