The Prisoner’s Dilemma in the Real World
The concept of “the prisoners dilemma” was familiar to many of us, even before it was recently introduced in class. It is a simple and interesting way to begin thinking about game theory and how people interact. It highlights important concepts such as dominant strategies, payoffs, and nash equilibrium. It can also be extended to “the iterated prisoner’s dilemma” which involves sequential games where players remember their opponent’s previous action, and can react accordingly. The prisoner’s dilemma is clearly a well-known concept that is widely studied.
Although the prisoner’s dilemma is well explained in many classes, the concept isn’t often tried in real life. An article on Businessinsider.com demonstrates that the best outcome for both players is mutual cooperation and shows how in real life, people are often more cooperative than one would expect. This is because the prisoner’s dilemma is simulated purely rationally when used as a model, which isn’t the case in the real world. Surprisingly, actual inmates cooperated 56% of the time, while students only cooperated 37% of the time in a study. Results like these show that real world interactions can’t always be perfectly predicted by models.
http://www.businessinsider.com/prisoners-dilemma-in-real-life-2013-7