Introduction to Game Theory/Prisoner’s


Let’s start by jumping right in and looking at a game. The confess, an option that is clearly inferior to both of them
game commonly referred to as The Prisoner’s Dilemma staying silent and getting 2 years each? Not only this, but
is a classic example used to demonstrate game theory. It in terms of total years in prison, this is the worst possible
is usually explained through the use of this story, although outcome!
the actual game called The Prisoner’s Dilemma - often
just called PD for short, is not limited to this situation.
The underlying dynamics of it can be used to describe all 0.3 Explanation
sorts of phenomena.
The reason that both players choose to confess is easy to
explain. Let’s talk about Person A (and whatever holds
0.1 The Story for Andy, will hold for Bob as well because they are both
in identical situations).
Two men, Andy and Bob, were arrested after an armed
The following is the explanation assuming that Andy &
robbery. The police had enough evidence to convict the
Bob cannot communicate their choices to each other di-
two for the theft of the get-away car, but not enough to
rectly or indirectly.
convict them for the actual armed robbery. However, if
the police could get a confession from either of the two Andy has the following Matrix:
men they could conceivably convict them both for the If he confesses:
armed robbery.
The police locked the two men in two separate rooms and Minimum Jail Term: 0 Years (If Bob remains silent)
gave them each the same offer: Maximum Jail Term: 7 Years (If Bob confesses)
If he remains silent:
If Andy confessed and Bob stayed silent, then
Andy would go scot-free and Bob would be
charged for the robbery and get 10 years in jail. Minimum Jail Term: 2 Years (If Bob remains silent)
Of course, this worked the other way around as Maximum Jail Term: 10 Years (If Bob confesses)
well. If Bob confessed and Andy stayed silent, The expected payoff for the game (the average amount
Andy would receive the 10 years. of benefit that a strategy will provide) is better — in
this case, 3.5 years expected jail time for confessing ver-
If Andy confessed and Bob confessed as well, sus 6 years for silence — if Andy confesses. Therefore,
then they would both receive 7 years in jail. from a rational perspective, Andy should choose to con-
fess rather than remain silent.
If both Andy and Bob stayed silent, then they
Also, it doesn't matter what Bob does - Andy is always
would both receive 2 years in prison for the get-
better off confessing. If Bob confesses, Andy can get ei-
away car robbery.
ther 7 years for confessing or 10 for silence, and if Bob is
silent, Andy can get either 0 years for confessing or 2 for
The two prisoners are left to make their decision without silence. Unfortunately for Person Andy, this also holds
any way to contact each other. The question is: what did true for Person Bob - who is always better off confessing.
each person choose? This means that if both agents do what is in their best
interests, they will be 7 years together in prison! This
demonstrates that in many games the “best” solution - the
0.2 Solution
one where the total utility of the outcome is highest - is
not the one which will ultimately occur.
The solution that occurs every time this game is played
(assuming each acts in his own best interests) is that both
Andy and Bob will choose to confess, resulting in a sen-
tence of 7 years each. This answer seems to be counter-
intuitive, doesn't it? Why would both players choose to


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