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Unformatted text preview: tcome... Suppose that Romeo IS the sensitive and considerate fellow that Juliet believed him to be and he decides to go to the soccer match simply to be with her (i.e. sacrifices his musical experience). At the same time, suppose Juliet DID decide to settle for a night of music because she knows how much it means to Romeo... If this scenario played itself out we would have the outcome (S, M) and the payoffs would be (0, 0). Both of the players are where they do not want to be...AND without each other's company. The "SELFLESS OUTCOME" ends up resulting in the worst case scenario. The moral of the story is... (I'll let you decide!) PRISONER'S DILEMMA Two criminals are picked up for shoplifting and immediately separated by the police (i.e. put into different interrogation rooms) before they can communicate. The police "know" but cannot prove that these are the same two crooks that have robbed seven area banks in the last two months. Now, the police need a confession from at least one of these "gentlemen" to close the bank robbery case...so... The prosecutor goes to each interrogation room and tells each of the crooks that he is offering both of them the following deal: "If one of you confesses to the bank jobs and the other does not, then the confessor will get one year in jail and the other will do a twentyfive year term." "If you both confess to the bank jobs then it's ten years for each of you." "and, if both of you refuse to confess the evidence that the police have on you for the shoplifting incident will get you both two year jail terms...but Constable 305 O'Ma alley tells me that it loo like you partner is about ready to `spill t beans' m oks ur s the and c confess." come? We each of t crimina will confe and end up ell, the als ess What is the outc servi 10 year apiece! ing rs If this doesn't make any se s m ense to you you are n alone... u, not Let's use our kn s nowledge o game theory to see w this "su of why uboptimal" outcome " occu urs. So f nfesses, the Nuckles en [1] S let's consider Nuckles' strategies first...If Snake con is be etter off to confess as w (i.e. 10 is much...
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 Spring '10
 sning
 Economics

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