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Prisoners Dilemma

Prisoners Dilemma is an example of a 2 person game. A 2 person game is one in which only 2 parties can play. 2 men are caught spending forged money and are arrested by the police. The detective believes these 2 men not only spent the forged money but counterfeited it also. However he has no evidence of this and so puts the men in different rooms and interrogates them separately.

He tells them that if neither of them confess to being a counterfeiter, then they will be charged with attempting to spend forged money for which they would be sentenced to 1 year in prison. If they both confess to being forgers then they would get a lenient sentence of only 4 years. If only one of them confesses to forgery they will get off, but the other prisoner will be get 10 years.

This information can be summarised into a pay-off matrix. The outcomes are ordered as pairs (A,B).

 B confesses B does not confess A confesses (-4,-4) (0,-10) A does not confess (-10,0) (-1,-1)

In the payoff matrix above the results are negative as they have something to lose, if they were positive it means they would be gaining something.

The worst outcome for A if he confesses is 4 years, and if he doesn’t confess it is 10 years. Therefore he will confess. Similarly for B if he confesses the worst outcome is that he gets 4 years were as if he didn’t confess he might get 10 years. Therefore he also looks to confess. Both A and B confess hence they both get 4 years in prison.