Prisoner's dilemma

Prisoner’s dilemma

https://en.wikipedia.org/wiki/Prisoner%27s_dilemma

The Prisoner’s Dilemma is a key concept in Game Theory, which is all about how people or groups make strategic decisions.

Here is an explanation in layman’s terms:

🤝 The Core Idea: Self-Interest vs. Group Benefit

The Prisoner’s Dilemma illustrates a situation where two individuals, acting purely in their own self-interest, end up creating an outcome that is worse for both of them than if they had chosen to cooperate.

It highlights the conflict between:

1. What’s best for me (individually).
2. What’s best for us (collectively).

🚓 The Classic Scenario

Imagine two criminals, let’s call them Alice and Bob, are arrested for a serious crime. The police put them in separate rooms, so they cannot communicate. The police offer each of them the following deal:

Alice’s Choices	If Bob Stays Silent (Cooperate with Alice)	If Bob Betrays Alice (Defect)
Alice Stays Silent (Cooperate)	Both get 1 year in prison (Good collective outcome).	Alice gets 3 years, Bob goes free (Worst for Alice).
Alice Betrays Bob (Defect)	Alice goes free, Bob gets 3 years (Best for Alice).	Both get 2 years in prison (Suboptimal collective outcome).

The “Dilemma”

Alice has to make her decision without knowing what Bob will do.

1. If Bob Stays Silent: Alice is better off betraying Bob (she goes free vs. 1 year in jail).
2. If Bob Betrays: Alice is also better off betraying Bob (she gets 2 years vs. 3 years in jail).

Since Alice is always better off betraying Bob, regardless of what Bob chooses, the “rational” choice for her, acting in her own best interest, is to Betray.

Bob goes through the exact same rational thought process and also chooses to Betray.

The result is that both Alice and Bob betray each other and end up with 2 years in prison. They both rationally chose the option that was individually best, but they landed on the collectively worst outcome compared to the possibility of both staying silent (which would have been only 1 year each).

💡 Real-World Examples

The Prisoner’s Dilemma is used to model decisions in many areas:

1. Business (Oligopolies): Two competing companies (like Coke and Pepsi) would make the most profit if they both agree to charge a high price (cooperate). But each company has an incentive to secretly lower their price to steal the other’s customers (defect). If they both lower their prices, they both end up making less money than if they had cooperated.
2. Environmental Issues: Every individual or country benefits most by continuing to pollute or over-fish (defect), but if everyone does this, the collective resource (clean air, fish stocks) is destroyed, making everyone worse off in the long run.
3. The Arms Race: Two rival nations would be safer if both agreed to disarm (cooperate). But each nation fears that if they disarm and the other nation doesn’t (defect), they will be vulnerable. Therefore, both continue to heavily arm themselves (mutual defection), spending vast sums of money and making the world a more dangerous place.

In all these cases, trust and the ability to enforce cooperation are what is missing, which leads the individuals (or companies/nations) down the path of self-interest and into a suboptimal outcome.