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Prisoner's Dilemma is a canonical example of a game analyzed in game theory that shows why two individuals might not cooperate, even if it appears that it is in their best interests to do so. The presentation takes you through various rounds of the game played at a business school.
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The Team
Mona Sharma
Sumedha Sharma
Vivek MehtaRobin Agarwal
Siddharth R
Agenda
• Case Background
• End Result
• Strategies
• Key Takeaways
• Learning applications
• Game Theory
Background
• The prisoners’ dilemma is the best-known game of strategy in social science
• It helps us understand what governs the balance between cooperation and competition in business, in politics, and in social settings.
• The concept of the prisoners’ dilemma was developed by RAND Corporation scientists Merrill Flood and Melvin Dresher and was formalized by Albert W. Tucker, a Princeton mathematician.
Rule
s of th
e
gam
e
The Thought Process
Interpretation & Psychology
Different Interpretations Different Objective Definitions
3 primary issues at hand
i.Freedom
ii.Beat the other team
iii.Partners vs Competitors
End Result
Clash of Objectives
Incentive Break-up
Group 4Group 4
Group Group 33
Don`t Confess
Confess
Don`t Confess
3,3 -6,6
Confess 6,-6 -3,-3
Group 4Group 4
Group 3Group 3
Contribute to common good
Behave Badly
Contribute to common good
3,3 -6,6
Behave badly 6,-6 -3,-3
Strategy AnalysisRoun
dGroup 3 Group 4 Strategy Reason
1 NC -6 C 6 ConfessedIf we had chosen " not confessed" . There were chances of heavy penalty
2 NC -6 C 6 ConfessedWe wanted to increase the gap between both the teams and maintain our positive balance
3 NC -6 C 6 ConfessedSince the strategy was working for us and keeping us in positive. So we stuck to "confession"
4 C -3 C -3 ConfessedWe were sure that they would go for confession and if we chose A we would get heavy penalty
5 C -6 C -6 ConfessedWe got the other team's signal but the stakes were even higher than last round.we stuck to our strategy of confessing
Strategy AnalysisRoun
dGroup
3Group 4 Strategy Reason
6 NC -6 C 6 Confessed
We got two negative scoring in the last rounds.we didn’t go for "No confession"because if the other team had confess we would have lost 6 points and got down to just 3
7 NC -6 C 6 ConfessedWe were sure that the other team will go for Y keeping in mind the last game.we wanted to play safe.
8 C -9 C -9 ConfessedKeeping last two rounds in minds.we expected group 3 to chose Y and to minimize our losses we chose B again
9 NC -36 C 36 Confessed The stakes were very high in the last 2 rounds and it was too late to cooperate with the other team as we couldn't send signals and expect them to understand it. Therefore the team stuck to its option of B
10 NC -36 C 36 ConfessedGroup 3 Group 4
Total -120 84
Key Takeaways• More efforts into defining objectives
• Defining precisely the allies and competitors
• Understanding the implicit signals from the external party
• Different strategy for different positioning
• Strategy should be adaptable according to changing environment
• Playing safe always doesn’t help
• Don’t take any information on face-value
Learning Applications
• The VISA check card
• Business choice and payoff in black
• Customer`s choice and payoff in blue
AdoptNot
Adopt
Adopt 1,1 -1,0
Not Adopt
0,-1 0,0
Learning Applications
Student 1
Student 2
Not study Study
Not study A,A D,A
Study A,D C,C
Thank You