Game Theory: Definition, Prisoner's Dilemma and Business.

In Game Theory, mathematicians and computer scientists use games like this to try to understand why people act in the way that they do. In the case of the Prisoner's Dilemma, it makes a big difference to the game if it is a one-off situation, or if it the same players repeat the game over and over again.

The prisoner's dilemma is often expressed as a game played on a computer but we see the ramifications of the prisoner's dilemma in all aspects of living in society. The essential question asked by the prisoner's dilemma: Can people be naturally cooperative, or do our individual genes require a selfish response to life situations? This question is of interest to mediators, as variations of it.

The prisoner's dilemma is a standard example of a game analyzed in game theory that shows why two completely rational individuals might not cooperate, even if it appears that it is in their best interests to do so. It was originally framed by Merrill Flood and Melvin Dresher while working at RAND in 1950.

In iterated prisoner's dilemma games, it is found that the preferred strategy is not to play a Nash strategy of the stage game, but to cooperate and play a socially optimum strategy. An essential part of strategies in infinitely repeated game is punishing players who deviate from this cooperative strategy.

In The Prisoner’s Dilemma, Martin Peterson asks readers to imagine two car manufacturers, Row Cars and Col Motors. As the only two actors in their market, the price each sells cars at has a direct connection to the price the other sells cars at.

The distinguishing feature of the Prisoner’s Dilemma is that in the short run, neither side can benefit itself with a selfish choice enough to make Up for the harm done to it from a selfish choice by the other. Thus, if both cooperate, both do fairly well.

Repeated Prisoner’s dilemma: In the game known as the Prisoner’s dilemma, the Nash equilibrium is Confess-Confess (defect-defect). In order to see what equilibrium will be reached in a repeated game of the prisoner’s dilemma, we must analyse two cases: the game is repeated a finite number of times, and the game is repeated an infinite number of times.

The Prisoners’ Dilemma: The firms working in oligopolistic markets make decisions in face of uncertainty about how their rivals will react to their moves. The game theory is a mathematical technique of analyzing the behaviour of rival firms with regard to changes in price, output and advertisement expenditure in the situations of conflicts of interest among individuals or firms.

Please note that the content of this book primarily consists of articles available from Wikipedia or other free sources online. The prisoner's dilemma constitutes a problem in game theory. It was originally framed by Merrill Flood and Melvin Dresher working at RAND in 1950. Albert W. Tucker formalized the game with prison sentence payoffs and gave it the prisoner's dilemma name.

If two players play Prisoner's Dilemma more than once in succession, having memory of at least one previous game, it is called iterated Prisoner's Dilemma. Amongst results shown by Nobel Prize winner Robert Aumann in his 1959 paper, rational players repeatedly interacting for indefinitely long games can sustain the cooperative outcome.

Both games stimulated thoughtful discussion on the reasons for each team’s actions and reactions. In both games, strategies changed and evolved as teams reacted to conditions on the board and to dialogue among teams. Social scientists have used the Prisoner’s Dilemma model to research behavior in everything from arms control to medical.

To conduct a classroom prisoner’s dilemma, all you need is a single deck of playing cards and copies of the instruction and record sheet that are provided in the Appendix. The instructions will fit on a single page, in 10 point type, but you may have to adjust the margins a little.