...Game Theory and the Prisoner’s Dilemma Business Strategy Antoinette Monteiro Grand Canyon University DBA 815 January 13, 2016 The Definition of Game Theory The game is the object of game theory, which is an interactive situation. There are several players involved in the situation; a game with only one person is a decision problem. According to game theory, the players, their preferences, their information, the strategic actions available to them, affects the outcome. Game theory is conflict and cooperation; the agents are interdependent on the actions of others. These agents are individuals, groups, firms or a combination of these combined. Game theory provides a language to formulate, structure, analyze and understand different circumstances (Turocy and Stengel, 2001 p.4). History and Effects of Game Theory An example of game analysis is the idea of two players dominating the marketplace which was introduced by Antoine Cournot in 1838. Emile Borel, a mathematician proposed a game theory in 1921 and this research was expanded by Neumann in 1928 called the “theory of parlor games.” This theory was solidified in the publication, “The Theory of Games and Economic Behavior by Neumann and Morgenstern. This book pioneers the basic terms and problems that are still in use to this day (Turocy and Stengel, 2001, p.4). The mathematician, John Nash showed that finite games have an equilibrium point in which players choose actions which give the best outcome for themselves...
Words: 1938 - Pages: 8
...Prisoner's Dilemma (Stanford Encyclopedia of Philosophy) 4/3/12 9:58 AM Open access to the SEP is made possible by a world-wide funding initiative. Please Read How You Can Help Keep the Encyclopedia Free Prisoner's Dilemma First published Thu Sep 4, 1997; substantive revision Mon Oct 22, 2007 Tanya and Cinque have been arrested for robbing the Hibernia Savings Bank and placed in separate isolation cells. Both care much more about their personal freedom than about the welfare of their accomplice. A clever prosecutor makes the following offer to each. “You may choose to confess or remain silent. If you confess and your accomplice remains silent I will drop all charges against you and use your testimony to ensure that your accomplice does serious time. Likewise, if your accomplice confesses while you remain silent, they will go free while you do the time. If you both confess I get two convictions, but I'll see to it that you both get early parole. If you both remain silent, I'll have to settle for token sentences on firearms possession charges. If you wish to confess, you must leave a note with the jailer before my return tomorrow morning.” The “dilemma” faced by the prisoners here is that, whatever the other does, each is better off confessing than remaining silent. But the outcome obtained when both confess is worse for each than the outcome they would have obtained had both remained silent. A common view is that the puzzle illustrates a conflict between individual and...
Words: 22614 - Pages: 91
...Prisoner’s dilemma is as standard example of game theory that shows that two rational indicidual might not cooperate even if cooperation will fit their best interest. (wiki) Let me explain the prisoner’s dilemma first. In prisoner’s dilemma, each individual act rationally. That means each individual should do anything that benefit her/him. Let’s imagine Jack and Rose has committed a crime and are arrested. During the interrogating, they are separated in two interrogate room, the game is shown below. - - Rose stays silent ( cooperates) - Rose betrays (defects) - Jack stays silent (cooperates) - Each serves 1 year - Jack: 3 years - Rose: goes free - Jack betrays (defects) - Jack: goes free - Rose: 3 years - Each serves 2 years In this dilemma,...
Words: 900 - Pages: 4
...What is the problem of collective action in International Trade and what is the way to solve it in Global Political Economy? The problem of collective action in international trade is a problem of “prisoners dilemma” or “free riding”. There are also two different points of view that become applicable while trying to understand this problem – a liberal view and a realist view. The liberal view believes that economics is the most important factor when it comes to international trade and if countries take collective action it will be for economic reasons. On the other hand the realist view believes that economics does not drive collective action in trade but politics does. Collective action in the context of international trade can be defined as free trade where countries do not put barriers for flow of goods and services and they work together to remove these barriers to ensure greater efficiencies. This lack of barriers is not the normal course of actions as pointed out by realists who believe that all nations act in their selfish interest and unless they are an export oriented economy with greater export than import, they will have very little incentive to remove barriers. But, it is believed by realists that if multiple countries come together the incentive to remove barriers is higher. There is always a conflict going on for national states. They want to promote free trade as everyone agrees that free trade will benefit them but they do worry about their national sovereignty...
Words: 1112 - Pages: 5
...RadioLab's podcast about the prisoner's dilemma gave another example of how this theory can affect if a person will defect or not. An important element that was pointed out during the show was the relationship between the two players. They then pointed out how the relationship affects the players decision. They asked the question, "Do I know this guy?" If not, im throwing him under the bus. When hearing this I thought about the card game that we played in class because if your partner was your friend the chances of you cooperating was higher than if it was a stranger. But one solution that they figured out was by conducting a computer terminant tournament where you submitted games concerning the prisoner's dilemma in which you played with other...
Words: 1786 - Pages: 8
...| The Need for Bureaucracy | | | | | | Name: Rob Lee TA: Vanessa Dolishny Student #: 250535352 Date: 2010-03-17 Throughout this course, inequality has been a topic that has been brought up in each sociological category. Some of these categories include religion, race and ethnicity, culture, education, and organizations and work. Karl Marx’s perspective of capitalist domination, which relates to each of these categories, suggests that the main cause of conflict in society is inequality, and this inequality brings about disadvantages to workers and benefits to the owners of capital. Although this perspective is backed by strong examples in today’s society, such as the decline in skilled labour leading to greater inequality between the proletariat (workers) and the bourgeoisie (capital owners), it spends too much time on blaming the structure of the system for making inequalities worse, without taking into consideration how much worse these inequalities would be today if the system were not structured the way it is. Therefore, when criticizing systems such as government, and its ability to organize and manage society, it is essential to recognize that without a government in place, and if society were to be adhocratic, the world would be chaotic and not nearly as efficient as it would be if a government were established. The government plays key roles in not only the stabilization of society, but also in helping it prosper in the long run. In...
Words: 2200 - Pages: 9
...Prisoner’s Dilema is a game with non-zero sum in game theory. The simplest form of the game have two gamer (called prisoner), each prisoner always wants to get the benefit for himself, no matter what the other benefit is. The result of the game is not optimal. If two prisoners cooperate with each other, the result is the best. But each prisoner naturally has a motivation to escape the prison. So that I is the reason why they call “dilemma”. Prisoner’ Dilemma focuses on researching the instant decision making when the prisoners have no time or do not expect to the cooperation or association in the future. The question is that two prisoners think rationally; this means that each prisoner chooses the most benefit option for himself no matter what the other want to cooperate or not, so they always choose the uncooperative option and this makes them have nothing. If they choose the cooperative option, both of them have benefit. pp.229 We assume the numerical result of China and Mexico when each nation produces or does not produce steel components in the table below: Japan Mexico Producing Not Producing Producing +10 +10 -10 +20 Not Producing +20 -10 -5 -5 From the table we can see that If Mexico chooses producing steel components option and Japan does not produce steel components, Japan (+20) will get more benefit than Mexico...
Words: 349 - Pages: 2
...action or policy each pursues in respect to the other. The study of bargaining process involves an analysis of the actors, the stakes and the factors involved. All theories feed into each other, and combining these theories allows for a more complete understanding of the issues involved in bargaining process and therefore helps to improve individuals negotiation skills. There are several different theories analyzing the process and outcome of bargaining process as follows:- 1. Integrative Approach Model 2. Game Theory 3. Behavioral Theory 4. Power Theory 5. Optimal Agent Independence 1. Integrative Approach Model The integrative approach divides the negotiating process into three phases: • Diagnostic • Formulation • Details In the practice of negotiation, these phases are not necessarily linear. Rather, they can be repeated and addressed many times throughout the negotiation process. The toughness dilemma in the integrative approach calls for tough diagnosis in order to clearly elucidate the true interests of each party. In the formulation phase, negotiators should be more soft, in order to find a common, mutually acceptable solution. In the detail phase, the negotiators should again take a tough stance to assure their party receives as much benefit from the bargaining process as possible. Diagnostic Phase The Integrative Approach focuses heavily on the diagnosis of the underlying issues which have created the conflict,...
Words: 3336 - Pages: 14
...A game is any situation of conflict with at least two players (it may be a person, company). Each side chooses some kind of behavior (strategy) to get the best payoff. Game theory is a way to study conflicts and strategies used to get best results. The decision process is made without full knowledge and that’s what drives people engage into game to strategize to get as good output as possible- perfectly to win everything or at least to lose as little as possible. Game theory as a mix of psychology, mathematics, logic and other academics areas can be useful in several ‘real life’ situations, including negotiations and business. It can be observed in an oligopoly market, when two companies offering a very similar product (for example gas) must find a way to win over their competitors. One can notice parallels in a situation of those companies and classical example of the game theory “prisoner dilemma”. Game theory may also be used in auctions, mergers and acquisitions, bargaining, real estate negotiations, salary negotiations and so on. The most common application of game theory in real life is setting price. Each company wants to set price as high as possible to maximize profit but also wants to win market share as big as possible. Companies can all set the same price for their products and split the profit between themselves or one could try and forecast an advantageous set of lower prices and basically win since their higher market share even at their lower prices will...
Words: 264 - Pages: 2
...Mandy Sanguigni Dr. Park Monopoly Simulation Reflections October 5, 2016 On October 5, 2016, during our Sociology 101 class we were played the game Monopoly. Each group member was given a different social class: middle class, upper middle class, or upper class and each needed to follow the given rules for each individual class. My particular selection was the upper middle class. Each member was given a starting asset amount, which my starting amount was only $1710.00, which was not much. It was frustrating and difficult to move ahead and succeed in the game when restricted with assets, property and overall not unable to buy particular areas around the board. I had a difficult time paying and buying appropriate buildings. The ending assets...
Words: 449 - Pages: 2
...Nuclear Weapons: Then and Now Politics, especially on an international level, is a complex and messy subject. One simply has to open up a newspaper or tune into the evening news for evidence. While many problems can be resolved peacefully through negotiations, there are problems in international relations that manage to escalate quickly and result in a war between two or more countries. From revolutionary wars to World Wars, violence has always been part of international relations. However, with recent technological advancements, wars have taken an especially deadly turn. Advanced weaponry has allowed soldiers to become more “efficient” when fighting a battle allowing them to kill many more enemy combatants and innocent bystanders. The most devastating of these newly created weapons are nuclear weapons such as the atomic and hydrogen bombs. These weapons have the capacity to eliminate hundreds of thousands of people, obliterate cities, and possibly end life on earth, as we know it. The most destructive of these weapons was tested by the Soviets in 1961 during the Cold War. The hydrogen bomb that was being tested had a destructive power of approximately 60 megatons. The Soviets formally named the bomb Ivan, but nicknamed it the “King of Bombs.” Originally, Ivan was going to be constructed with a power of 100 megatons, but the Soviets decided it was too risky and dangerous. To put this in perspective, a single megaton can create temperatures that are five times as intense as the...
Words: 2133 - Pages: 9
...The Prisoners' Dilemma Cooperation is usually analysed in game theory by means of a non-zero-sum game called the "Prisoner's Dilemma" (Axelrod, 1984). The two players in the game can choose between two moves, either "cooperate" or "defect". The idea is that each player gains when both cooperate, but if only one of them cooperates, the other one, who defects, will gain more. If both defect, both lose (or gain very little) but not as much as the "cheated" cooperator whose cooperation is not returned. The whole game situation and its different outcomes can be summarized by table 1, where hypothetical "points" are given as an example of how the differences in result might be quantified. Action of A\Action of B Cooperate Defect Cooperate Fairly good [+ 5] Bad [ - 10] Defect Good [+ 10] Mediocre [0] Table 1: outcomes for actor A (in words, and in hypothetical "points") depending on the combination of A's action and B's action, in the "prisoner's dilemma" game situation. A similar scheme applies to the outcomes for B. The game got its name from the following hypothetical situation: imagine two criminals arrested under the suspicion of having committed a crime together. However, the police does not have sufficient proof in order to have them convicted. The two prisoners are isolated from each other, and the police visit each of them and offer a deal: the one who offers evidence against the other one will be freed. If none of them accepts the offer, they are in fact cooperating...
Words: 902 - Pages: 4
...An introduction to game theory by Martin J. Osborne. Version: 2002/7/23. Martin.Osborne@utoronto.ca http://www.economics.utoronto.ca/osborne Copyright © 1995–2002 by Martin J. Osborne. All rights reserved. No part of this book may be reproduced by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from Oxford University Press, except that one copy of up to six chapters may be made by any individual for private study. 2 Nash Equilibrium: Theory 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 Strategic games 11 Example: the Prisoner’s Dilemma 12 Example: Bach or Stravinsky? 16 Example: Matching Pennies 17 Example: the Stag Hunt 18 Nash equilibrium 19 Examples of Nash equilibrium 24 Best response functions 33 Dominated actions 43 Equilibrium in a single population: symmetric games and symmetric equilibria 49 Prerequisite: Chapter 1. 2.1 Strategic games is a model of interacting decision-makers. In recognition of the interaction, we refer to the decision-makers as players. Each player has a set of possible actions. The model captures interaction between the players by allowing each player to be affected by the actions of all players, not only her own action. Specifically, each player has preferences about the action profile—the list of all the players’ actions. (See Section 17.4, in the mathematical appendix, for a discussion of profiles.) More precisely, a strategic game is defined as follows...
Words: 19938 - Pages: 80
...Assignment 2: Planning and Playing a Game Objectives: • Learn how individuals contribute to teamwork • Experience some of the features of group work and teamwork • Understand what managers and organizational developers do to transform • groups into teams • Articulate the tangible benefits (both quantitative and qualitative) of • high-performing teams • Finish with an interest in learning more about these concepts and • techniques to apply what you learn Background: For this assignment, you will plan and play a game with your family or friends, or at work based on the idea of the classic prisoner's dilemma. If you have had a class on game theory, you will be well aware of this concept. It forms the basis of many TV game shows. The prisoner's dilemma was illustrated in Truman Capote's book, "In Cold Blood" concerning the 1959 robbery of a Kansas farmhouse by Perry Smith and Dick Hickock, who murdered their victims in order to eliminate the witnesses. After the men were captured, the police interrogated them separately. To get a confession, the police offered the men a reduced sentence for cooperating. Failure to cooperate would result in a death penalty charge for both. In the prisoner's dilemma, if both parties cooperate they are mildly punished; if one betrays another, one is severely punished while the other goes free; and if both betray one-another, both are moderately punished. Can you think of settings where you work in which the...
Words: 931 - Pages: 4
...Assignment 2 Planning and Playing a Game https://homeworklance.com/downloads/assignment-2-planning-and-playing-a-game/ • Learn how individuals contribute to teamwork • Experience some of the features of group work and teamwork • Understand what managers and organizational developers do to transform • groups into teams • Articulate the tangible benefits (both quantitative and qualitative) of • high-performing teams • Finish with an interest in learning more about these concepts and • techniques to apply what you learn Background: For this assignment, you will plan and play a game with your family or friends, or at work based on the idea of the classic prisoner’s dilemma. If you have had a class on game theory, you will be well aware of this concept. It forms the basis of many TV game shows. The prisoner’s dilemma was illustrated in Truman Capote’s book, “In Cold Blood” concerning the 1959 robbery of a Kansas farmhouse by Perry Smith and Dick Hickock, who murdered their victims in order to eliminate the witnesses. After the men were captured, the police interrogated them separately. To get a confession, the police offered the men a reduced sentence for cooperating. Failure to cooperate would result in a death penalty charge for both. In the prisoner’s dilemma, if both parties cooperate they are mildly punished; if one betrays another, one is severely punished while the other goes free; and if both betray one-another, both are moderately punished. Can you think of...
Words: 940 - Pages: 4
