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Chapter 14: Problem 4

What is a prisoner's dilemma game? Is the outcome of the game likely to be different in a repeated game? Briefly explain.

Short Answer

Expert verified
A prisoner's dilemma game is a paradox in decision analysis in which two individuals acting in their own self-interest result in a worse outcome than if they had cooperated. In a one-shot game, each player is incentivised to betray the other. However, in a repeated game, the outcome can be different. The potential for repeat interactions can lead to cooperative behavior, as players may hope to benefit from mutual cooperation in the future.

Step by step solution

01

Define Prisoner's Dilemma Game

A prisoner's dilemma game is a paradox in decision analysis in which two individuals acting in their own self-interest result in a worse outcome than if they had cooperated. In this game, each player faces two options; either to 'cooperate' and not betray the other or to 'defect' and betray the other.
02

Outcome of the Prisoner's Dilemma Game

The game ends up in a situation where both prisoners reveal the other, seeking a reduced sentence. This scenario is not optimal because if both prisoners had stayed silent, they would have both received a less severe sentence. This outcome occurs because, in the one-shot version of the game, each player is incentivised to betray the other, regardless of what the other player does.
03

Outcome difference in a Repeated Game

In a repeated prisoner's dilemma game, the outcome can indeed be different compared to a one-shot game. The potential for repeat interaction can lead to cooperative behavior because players may choose to cooperate in the hope of benefiting from mutual cooperation in the future. This is often referred to as 'tit-for-tat' strategy.

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