Example of Prisoner’s Dilemma in a Game Show
There are many scenarios in the world when the Prisoner’s Dilemma game we discussed in class comes into play. In Richard Thaler’s lecture yesterday, he presented a video which shows an example of this game. The clip is a segment from a British game show called “Golden Balls.” In this show, there are two contestants, and at the end of the game they are presented with a jackpot. Both contestants are given two golden balls and they are told to pick one without knowing what the other person chooses. One ball says “steal,” while the other says “split.” If both players choose to split, then they will split the pot. If one person chooses to split, while the other picks the steal ball, the one who chose to steal gets the entire pot. If both contestants choose to steal, they both leave with nothing. The only Nash-equilibrium in this game is for both players to steal, however if that happens, they both leave with nothing.
Thaler described this game from a behavioral economist’s perspective, which is different from how we looked at it in class and in the text. He said that there are 4 types of people who will play this game. The first type is a gameboy, or someone who will never cooperate in order to get the optimal outcome. In this show, this type of person would always choose to steal, because that move has the highest expected payoff. The second type of person is the good guy, or someone who will always cooperate. In the game show, this type of person will always split. The third type of person Thaler described is a spiteful person who will always try to screw the other person over. This person will always choose to steal, but he does not have the same motives as the gameboy. He steals so that the other person leaves with nothing, not to win. The fourth person will always do what he thinks the other person will do. If he thinks the other person will steal, he will steal. If he thinks the other contestant will split, then he will also split.