The prisoners' dilemma is a two-person game illus- trating...

The prisoners' dilemma is a two-person game illus- trating that a. the cooperative outcome could be worse for both people than the Nash equilibrium. b. even if the cooperative outcome is better than the Nash equilibrium for one person, it might be worse for the other. c. even if cooperation is better than the Nash equilib- rium, each person might have an incentive not to cooperate. d. rational, self-interested individuals will naturally avoid the Nash equilibrium because it is worse for both of them.

The prisoners' dilemma is a two-person game illus-
trating that
a. the cooperative outcome could be worse for both
people than the Nash equilibrium.
b. even if the cooperative outcome is better than the
Nash equilibrium for one person, it might be worse
for the other.
c. even if cooperation is better than the Nash equilib-
rium, each person might have an incentive not to
cooperate.
d. rational, self-interested individuals will naturally
avoid the Nash equilibrium because it is worse for
both of them.

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Key Concepts

Dominant Strategy

A dominant strategy is one that yields a better outcome for a player regardless of what the other player does. In the prisoners' dilemma, defection is the dominant strategy since it offers a higher payoff for each player regardless of whether the other cooperates or defects.

Incentive to Defect

This refers to the mechanism in the prisoners' dilemma where each player has a strong personal incentive to choose a non-cooperative strategy (defection) in order to minimize their own risk, even though mutual cooperation would lead to a better outcome for both. This contrast between individual incentives and collective welfare is central to the dilemma.

Nash Equilibrium

This concept describes a state in a strategic game where no player can gain by unilaterally changing their strategy, given the other player's strategy. In the context of the prisoners' dilemma, the equilibrium is reached when both players choose to defect, because deviating from this strategy would lead to a worse outcome for the individual.

Prisoners' Dilemma

This is a canonical example in game theory illustrating a situation where two players, acting in their own self-interest, might not achieve the best overall outcome. It shows how individual rationality can lead individuals to defect, even when cooperation would yield collectively better outcomes.

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