Game Theory
Game Theory
Game Theory
Introduction
• The players
• The order of play
• The information
• The outcomes
Solving the game
Confess Do not
confess
Bob Confess 5,5 0,20
Confess Do not
confess
Bob Confess Lose, Lose,
Lose Win
Do not Win, Win,
confess Lose Win
Effect of Prisoners’ Dilemma
• Acting “rationally” leads to inefficient result
• Demonstrates a common conflict strategy called
minimax
• Minimax means people minimize the worst harm
others can inflict on them
• PD models the reason why people may be
uncooperative when cooperation will yield a
better result for all parties
Equilibrium
Advanced Proven
• Prisoners’ Dilemma
• Chicken
• Deadlock
• Stag Hunt
Chicken
• Developed from teenage automobile
challenge
• Mutual defection is worst outcome
• Unilateral defection by other is best
outcome
• Both the PD and Chicken demonstrate
how cooperation is subverted by individual
rationality
Deadlock
• Occurs when two parties fail to cooperate
because neither wants to cooperate
• Unlike PD, the parties prefer mutual defection
over mutual cooperation
• Usually arises because the parties do not see
how mutual cooperation will provide a larger
payoff than mutual defection
• The peacemaker’s solution is to find a way to
increase payoff for mutual cooperation
Deadlock Matrix
Cooperate Defect