Areesha Munir
In experimental economics, we discussed about many game theories. Prisoner dilemma is one of them. Basically prisoner dilemma is a classical problem in game theory that explores the conflict between individual rationality and collective rationality. It involves two individuals who have been arrested for committing a crime together and are held in separate cells. They are both given the option to cooperate with each other or betray with each other. Penalties Here are different penalties for different situation. 1.If both prisoners cooperate with each other, they each receive a moderate sentence for a lesser offense. 2.If one prisoner betrays while the other remained silent, the betrayer will be set free, and the one who remained silent will receive a severe sentence. 3. If both prisoners betrays they both receive a somewhat harsh sentence. Economic behavior The prisoner’s dilemma has implications for economic behavior and can help us understand certain economic phenomena. If two parties who are trading with each other will cooperate with each other. This will make both parties believe in each other. And the economic condition of our country will also improve. For example: Competition vs cooperation: In many economic situations, individuals or firms face a choice between competing aggressively or cooperating with each other. The dilemma illustrates that while individuals self-interest may lead to aggressive competition, cooperation can often yield betteroutcomes for all parties involved. This insight is relevant in understanding strategic interactions, such as pricing, decision, or farming business alliance. Conclusion From this game theory, I have learned that we should cooperate with each other. It is beneficial for us and also beneficial for our economic condition. If we will not cooperate with each other then we will not be able to believe each other. Cooperation and mutual cooperation often yield better overall results, but they require trust. The prisoner dilemma encourage us to consider the consequence of our choices, the potential benefit of cooperation, and the need for trust and communication to navigate complex interaction.