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...
Another Way of Looking at It
For those who find the prisoner example a little obscure, perhaps it is better explained in the form of a simple game. ... The point of the game is not to eliminate the opponent, but simply to accrue as many points as possible for oneself. This is not a zero-sum game such as chess - success does not depend on the failure of ones opponent, but rather on ones ability to adapt appropriately to their behavior. The game is iterated - that is, there will be a series of rounds rather than it simply being a one-off event. ... Therefore, if the game is being played between two rational players, the logical outcome, bearing in mind that neither player knows what the other is going to do, is that both will defect, and therefore they will both end up with P - only one point apiece. ... In the Prisoners Dilemma, the outcome weve represented as (2, 2), indicating mutual defection, was said to be the ‘solution’ to the game. Following the general practice in economics, game theorists refer to the solutions of games as equilibria. Philosophically minded readers will want to pose a conceptual question right here: What is ‘equilibrated’ about some game outcomes such that we are motivated to call them ‘solutions’? ...
Question 1: Represent the game in form of a prisoner’s dilemma.
The game as per the given facts maybe represented as follows:
Question 2: if Iran were to cheat successfully, what would be daily increase in Iran’s profits? ... If the game is played over a finite horizon and both countries know that, demonstrate how cooperation can breakdown even in a repeated game scenario? ... Often it is seen that players in the game theory cooperate with each other provided the game is played not only once but repeatedly. ...
Quantity(in Gallons) Price Total revenue(profit)
0 120 0
10 110 1100
20 100 2000
30 90 2700
40 80 3200
50 70 3500
60 60 3600
70 50 3500
80 40 3200
90 30 2700
100 20 2000
110 10 1100
120 0 0
Now Let there are two parties to the game, IRAN and IRAQ. ... Thus, in a game of repeated prisoner’s dilemma, two players may well be able to reach cooperation. ...
But unfortunately, these two mechanisms of cooperation can break down if game is played over a finite horizon.
For a finite horizon there’s always a last time and a firm can gain if it cheats the last time the game is played, because there is no opportunity for retaliation. ... The result may be that each play of the game degenerates into a prisoner’s dilemma. ... Just like the Prisoners Dilemma game, the overriding thought is that you can only be worse off as a result of co-operating. ... After all, as Hofstadter points out, in a game played between truly (super) rational thinkers, choosing to defect undermines your reasons for doing so. ... It is a simple principle that, in theory, everyone can learn - and the more people who learn it, the better it is for all of us.
Approximate Word count = 3167
Approximate Pages = 12.7
(250 words per page double spaced)
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