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Added an important condition of the game so the punishments actually make sense
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The game is usually phrased in terms of two suspects, both of whom have been arrested for a major crime, who are offered a bargain. If both stay silent, each of them can still be convicted of a minor crime and sentenced to 6 months in prison. If one of them confesses, this provides evidence of a major crime. The confessor is rewarded by being let off of all crimes, and the other suspect will serve ten years in prison. If both confess, they will both serve two years in a plea for the major crime.
The game is usually phrased in terms of two suspects, both of whom have been arrested for a major crime, who are offered a bargain. If both stay silent, each of them can still be convicted of a minor crime and sentenced to 6 months in prison. If one of them confesses and implicates the other, this provides evidence of a major crime. The confessor is rewarded by being let off of all crimes, and the other suspect will serve ten years in prison. If both confess, they will both serve two years in a plea for the major crime.
It is obvious that the best outcome (the [[Pareto optimum]]) for the group would be if both prisoners cooperated and stayed silent: Six months for both prisoners. However, in the "default" setting of the Prisoner's dilemma, we assume that the prisoners are not given the chance to work out such a strategy and that they are interested in their own wellbeing first.
It is obvious that the best outcome (the [[Pareto optimum]]) for the group would be if both prisoners cooperated and stayed silent: Six months for both prisoners. However, in the "default" setting of the Prisoner's dilemma, we assume that the prisoners are not given the chance to work out such a strategy and that they are interested in their own wellbeing first.
The strategy "confess" is a strictly [[dominant strategy]]: The choice of the Prisoner B does not change the way Prisoner A will act. The "confess/confess" scenario is also the only [[Nash equilibrium]] in this problem.
The strategy "confess" is a strictly [[dominant strategy]]: The choice of the Prisoner B does not change the way Prisoner A will act. The "confess/confess" scenario is also the only [[Nash equilibrium]] in this problem.
When a situation like the prisoner's dilemma, where the Pareto efficient outcome is not the actual outcome, occurs in a market economy, that is an example of a [[market failure]].
==Iterated Prisoner's Dilemma==
==Iterated Prisoner's Dilemma==