The Prisoner’s Dilemma

- Both arrested during botched bank robbery.- Kept in separate cells – NO COMMUNICATION.- Offered separate deals if they confess and cooperate.

The Prisoner’s Dilemma

Jimmy Confess Don’t Confess

Confess

Don’t Confess

Kendell

Each serves 10 years.

Kendell Goes Free,Jimmy Serves 20

Years

Kendell Serves 20 Years,

Jimmy Goes Free

Each Serves 1 Year

Payoff Matrix ↑

Each serves 10 years.

Kendell Goes Free,Jimmy Serves 20

Years

Kendell Serves 20 Years,

Jimmy Goes Free

Each Serves 1 Year

The Dominant Strategy: the strategy that is better for one player, no matter what the other player does.

Jimmy

Confess

Don’t Confess

Kendell

Confess Don’t Confess

$250, $200 $450, $300

$180, $500 $390, $400

The Dominant Strategy: there is not always a dominant strategy for both players, or for either player.

Jimmy’s Tutoring

Advertise

Don’t Advertise

Kendell’s Tutoring

Advertise Don’t Advertise

$250, $200 $450, $300

$180, $500 $390, $400

Nash Equilibrium: the point where both players have made their best choice, taking into consideration what the other player does.

Jimmy’s Tutoring

Advertise

Don’t Advertise

Kendell’s Tutoring

Advertise Don’t Advertise

$250, $200 $450, $300

$180, $500 $390, $400

Nash Equilibrium: the point where both players have made their best choice, taking into consideration what the other player does.

Jimmy’s Tutoring

Advertise

Don’t Advertise

Kendell’s Tutoring

Advertise Don’t Advertise

$250, $200 $450, $300

$180, $500 $390, $400

Nash Equilibrium: the point where both players have made their best choice, taking into consideration what the other player does.

Jimmy’s Tutoring

Advertise

Don’t Advertise

Kendell’s Tutoring

Advertise Don’t Advertise