Prisoner’s Dilemma

Prisoner’s Dilemma: The Prisoner’s Dilemma is a standard example of a situation in Game Theory where two individuals acting in their own self-interest do not produce the optimal outcome. In this scenario, each prisoner has two choices: to cooperate with the other by remaining silent or to betray the other by confessing. The dilemma arises because the optimal outcome for both would be to cooperate, but each has an incentive to betray the other, leading to a worse overall outcome if both betray.

Example: Two suspects are arrested and interrogated separately. If both remain silent, they each get 1 year in prison. If one betrays the other while the other remains silent, the betrayer goes free, and the silent accomplice gets 3 years. If both betray each other, they each get 2 years. The dilemma illustrates that rational self-interested decisions can lead to a worse collective outcome.

Case Study: In environmental issues, countries face a similar dilemma regarding pollution. If all cooperate by reducing emissions, the environment improves for all. However, if one country chooses to pollute while others cooperate, that country gains an economic advantage. If all countries choose to pollute, they all suffer from the negative effects of climate change, demonstrating how individual incentives can lead to collective failure.