Prisoner’s dilemma is an economic term which is used in the game theory. Prisoner’s dilemma was first coined by Melvin Dresher and Merrill Flood when they were working in RAND in 1950. It is basically a paradox in the decision analysis. This includes when two individuals or elements are acting for their personal gain and self-interest, for pursuing a specific course of action, which can or cannot result in the ideal outcome. The majorly proposed prisoner’s dilemma is set up in such a way that both the elements and individuals choose to protect themselves at the expense of the other individual. Due to the purely logical thought process, both the elements find their self-interest in a worse state than if they had worked with each other in the discussion process.
In a simpler way, the prisoner’s dilemma stipulates the simplest personal interest which seems more desirable than the other interests. But sometimes, it leads to a bad result and understanding between the two groups or parties engaged in this. If both the parties engage in their own self-interest ways, then also the result may not be much favorable. Prisoner’s dilemma helps in understanding what are the factors responsible for balancing between the competition and the cooperation in politics, business and as well as in social settings. Prisoner’s dilemma is widely used for the applications in business properties and economics. The arms races between the local rival nations and the superpower nations are another example of the prisoner’s dilemma. Both the countries are better off when they are equally contributing to one another and avoid an arms race. They should cooperate. But the dominant strategy for each of them is to arm itself heavily and without any backdrops.
Let’s take an example which will give the best insight into the prisoner’s dilemma used in game theory:
Suppose, there are two members of a criminal gang who are arrested for a crime they did and are sentenced to imprisonment. Each of the prisoners is taken into a solitary confinement and given no liberty to communicate with anyone, other than the prosecutors. The prosecutors lack enough evidence which will convict the prisoners directly. The principal charge could not be imposed due to lack of solid evidence. The prosecutors hope to get the prisoners sentenced to at least a year on a marginal lesser charge. So with the planning, the prosecutors offer each of the prisoners a bargain. Each of the prisoners is given a rational opportunity either to betray the other prisoner by giving solid evidence about the other prisoner or to cooperate with the other prisoner by remaining silent and not discussing anything. The detailed offer is as follows:
These are the terms of offer given to the prisoners.
By analyzing this dilemma, we can see that each one of the prisoners is always punished less for choosing to betray the other person. But, as a group, both of the prisoners’ fare better and stand a better chance when cooperating with each other and stay silent.
This is the dilemma that both the prisoners face. To betray or to cooperate. Which course of action will prove beneficial for their own? Even if the best solution would be to cooperate with each other, but due to uncertainty and distrust, one prisoner or both can betray each other which will result in higher punishment and lesser optimum solution. For ex: In an Advertising market, if two companies are rivals, and both of them spend money on advertising, it will result in no change in their market share. But if one company outdo or outspend than the other, then it will receive more benefits than the one company which spent less. Another example is that of a pair who is working on a project. You do best if your competitor does all the work since you get the same grade. But if neither of you does the work, you both fail. These are the best examples of real life crisis of a prisoner’s dilemma. The prisoner’s dilemma majorly demonstrates that two different yet rational people might not cooperate, even if the best course of action is right away available to them.
In sports, prisoner’s dilemma is seen many times. It is seen whenever a doping incident comes in the air. It is one of a good example of prisoner’s dilemma. Two of the most competing athletes have the option to boost their performance for the world championship by using some illegal and dangerous drugs. If neither of the athletes takes any drug, then neither of them gain any advantage. If only one of them takes the drug, then that athlete gains a significant advantage over the other, reduced by the legal and or medical dangers of having consumed the drugs. If both the athletes take the drug, however, the benefits cancel out and only the dangers or medical dangers remain. This position is worse than if neither had used doping in the first place.
There are also many real life dilemmas which involve multiple players. A very common one is washing the dishes in a house in which many family members reside. By not washing dishes an individual can gain by saving his or her time. But on the other hand, if the behavior is adopted by each and every family member, then there will be no clean plates.