Prisoners Dilemma

Submitted By: Group 2

Akshay Shankar (14S606)
Arya Ankit (14S610)
Mayank Apte (14S624)
Namrata Singh (14S626)
Prakhar Agarwal (14S632)

Prisoners Dilemma

Two suspects A, B are arrested by the police.

The police have insufficient evidence for a conviction, and having separated
both prisoners, visit each of them

The prosecutor offers each of them a deal. He also disclosed to each that the
deal was made to the other. The deal he offered is this:

a) If you will confess that the two of you committed the crime and the other guy
denies it, we will let you goand send him up for five years.
b) If you both deny the crime, we have enough circumstantial evidence to put
both of you away for two years.
c) If both of you confess to the crime, then you'll both get 4 year sentences.

Prisoners Dilemma

Each prisoner has two options:

To cooperate with his accomplice and stay quiet
To betray his accomplice and give evidence

The outcome of each choice depends on the choice of the accomplice.

However, neither prisoner knows the choice of his accomplice.

The optimal solution would be for both prisoners to cooperate with

each other, as this would reduce the total jail time served by the
group to two year total.

Any other decision would be worse for the two prisoners considered
together. However by each following their individual interests, the two
prisoners each receive a lengthy sentence.

Payoff Matrix
Prisoner A Stays
Silent
Prisoner
B Stays
Silent
Prisoner
B Betrays

Both Serve 2 years

Prisoner A serves 5
years;
Prisoner B goes free

Prisoner A
Betrays
Prisoner B serves 5
years;
Prisoner A goes free

Both serve 4 years

Nash Equilibrium

In a Nash equilibrium one person looks at what the other might do and decides that, as they
cant tell what their choice will be, they have to stick with the option that is safest in all cases.

They have to go for the dominant strategy. This applies to both prisoners, hence the state of
equilibrium.

But is this actually whats best for the people involved? No, it isnt!

Both prisoners will reach that same conclusion that confession is the dominant strategy both
will confess. That means they both get 4 years in jail.

However, if they both deny they only get 2 years! This is the option that involves the least
combined jail time. This makes it whats called the optimum outcome.

But can you trust your partner to figure this out? If you deny and they still confess youre
looking at 5 years!

Lessons from Prisoners dilemma

In real life people, especially when it comes to businesses, tend to see others as
competition rather than partners.

Therefore, they go for the safe option i.e. the dominant strategy.

Due to not cooperating properly people and businesses usually miss out on the optimum
outcome

They are scared of straying from the dominant option, which guards against the
unpredictability of others.

We could all be better off if we all worked together, but in business that isnt how it works.

The Prisoner's Dilemma in Business

Business life is rife with prisoner's dilemmas including the
employer-employee relationship and that between vendor and
customer
Offering new job
Business with its vendors and its clients: The Prisoner's Dilemma in
Software Development
Executives in different parts of a company : the original calculator
business has now cloned an evil twin intent on competition

Such things happen every day!!

The Scorpion & Frog Story

A scorpion and a frog meet on the bank of a stream and
the scorpion asks the frog to carry him across on its
back.
The frog asks, How do I know you wont sting me?
The scorpion says, Because if I do, I will die too.
The frog is satisfied, and they set out. But in
midstream,
the scorpion stings the frog.
The frog feels the onset of paralysis and starts to sink,
knowing they both will drown, but has just enough time
to gasp Why?
Replies the scorpion: Its my nature

The Scorpion Story-LessonsTrust

Learn to spot scorpions fast and early in
the game
Focus on the nature of people they can
change everything but not their fundamental
nature
Always carry an antidote you never know
when a scorpion will sting you!

Risk
Management
Altruism

The Scorpion Story-Lessons Trust

Trust is built when someone is
vulnerable and not taken advantage
of
Trust, but verify
Learning to trust is one of life's
most difficult tasks

Risk
Management
Altruism

The Scorpion Story-Lessons Trust

Do not change your Altruistic
behaviour when others are a threat
to you
but...
Take calculated risks while dealing
with such people

Risk
Management
Altruism