Game Theory - Prisoner's Dilemma

Question 1

What is the Prisoner’s Dilemma?

Answer 1

A game theory scenario where two rational individuals might not cooperate, even if it would benefit both.

Question 2

In the Prisoner’s Dilemma, what happens if both prisoners stay silent?

Answer 2

They both receive a light sentence.

Question 3

What is the outcome if one prisoner confesses and the other stays silent?

Answer 3

The confessor goes free, and the silent prisoner gets a heavy sentence.

Question 4

What happens if both prisoners confess in the Prisoner’s Dilemma?

Answer 4

They both receive a moderate sentence.

Question 5

Why is the Nash equilibrium in the Prisoner’s Dilemma for both prisoners to confess?

Answer 5

Because confessing is each prisoner’s best response to the other’s confession, leading to no incentive to change.

Question 6

Why does the Prisoner’s Dilemma lead to a suboptimal outcome?

Answer 6

Because rational self-interest leads both prisoners to confess, resulting in a worse outcome than if they both stayed silent.

Question 7

Define ‘Dominant Strategy’ in the context of the Prisoner’s Dilemma.

Answer 7

A strategy that provides a better or equal outcome for a player, regardless of the other player’s choice.

Question 8

In real-world applications, what does the Prisoner’s Dilemma model?

Answer 8

Situations where self-interest can lead to suboptimal group outcomes, like price wars or environmental policy.

Question 9

How can repeated interactions affect the Prisoner’s Dilemma?

Answer 9

Repeated interactions can encourage cooperation through strategies like tit-for-tat.

Question 10

Explain the ‘Tit-for-Tat’ strategy in the Iterated Prisoner’s Dilemma.

Answer 10

A strategy where a player starts with cooperation, then mirrors the other player’s previous move, promoting trust.

Question 11

What is the effect of communication on the Prisoner’s Dilemma outcome?

Answer 11

Communication can lead to trust and cooperation, potentially avoiding mutual defection.

Question 12

Give an example of a real-world application of the Prisoner’s Dilemma in economics.

Answer 12

Price wars, where companies would benefit from high prices but compete by lowering prices.

Question 13

What is the main lesson of the Prisoner’s Dilemma in terms of cooperation?

Answer 13

That self-interest can prevent mutually beneficial cooperation.

Question 14

Fill in the blank: In the Prisoner’s Dilemma, mutual defection leads to a ______ outcome for both players.

Answer 14

suboptimal

Question 15

Why is the Prisoner’s Dilemma used to study public goods contributions?

Answer 15

It models situations where individuals benefit from public goods but are tempted to ‘free ride’ by not contributing.

Question 16

What does the ‘Iterated Prisoner’s Dilemma’ demonstrate?

Answer 16

How repeated interactions can lead to cooperation over time.

Question 17

Define the ‘N-player Prisoner’s Dilemma.’

Answer 17

A version of the dilemma involving more than two players, modeling group cooperation challenges.

Question 18

Fill in the blank: In the Iterated Prisoner’s Dilemma, the ‘Tit-for-Tat’ strategy starts with ______ and mirrors the other player’s last move.

Answer 18

cooperation

Question 19

What outcome occurs when countries act in self-interest in the Prisoner’s Dilemma of environmental policy?

Answer 19

They may avoid reducing emissions, leading to worse environmental outcomes for all.

Question 20

Explain the concept of ‘Reward and Punishment’ in the Prisoner’s Dilemma.

Answer 20

Systems that encourage cooperation by rewarding cooperation or penalizing defection.

Question 21

What role do social norms play in the Prisoner’s Dilemma?

Answer 21

Social norms can encourage individuals to cooperate, even against self-interest.

Question 22

Why is mutual cooperation difficult in a single-round Prisoner’s Dilemma?

Answer 22

Because players lack trust and can’t communicate, leading them to choose self-interest (defection).

Question 23

Fill in the blank: The Prisoner’s Dilemma illustrates the conflict between ______ and collective benefit.

Answer 23

self-interest

Question 24

What is the significance of a ‘suboptimal outcome’ in the Prisoner’s Dilemma?

Answer 24

It shows how individual rationality can lead to worse outcomes for everyone.

Question 25

How does the Prisoner’s Dilemma relate to arms races?

Answer 25

Countries might increase military spending out of self-interest, leading to a costly arms race for both.

Question 26

In the Prisoner’s Dilemma, what happens when each prisoner makes the rational choice for themselves?

Answer 26

They end up with a worse outcome (moderate sentences) than if they cooperated (light sentences).

Question 27

How can trust influence the outcome in the Prisoner’s Dilemma?

Answer 27

Trust can lead to cooperation, resulting in a better collective outcome.

Question 28

Fill in the blank: In the Prisoner’s Dilemma, the best collective outcome occurs when both prisoners choose to ______.

Answer 28

stay silent

Question 29

Why is the Prisoner’s Dilemma considered a non-cooperative game?

Answer 29

Because players cannot form binding agreements and act independently based on self-interest.

Question 30

Explain why businesses face a Prisoner’s Dilemma in price competition.

Answer 30

Each business benefits from higher prices, but each has an incentive to undercut the other, leading to a price war.

Question 31

What is a ‘Best Response’ in the Prisoner’s Dilemma?

Answer 31

The strategy that maximizes a player’s payoff given the other player’s choice.

Question 32

Fill in the blank: A repeated Prisoner’s Dilemma allows players to develop ______ and encourage cooperation.

Answer 32

trust

Question 33

How does the Iterated Prisoner’s Dilemma show the importance of reputation?

Answer 33

Players may cooperate to maintain a good reputation, expecting future cooperation in return.