Syeda Aymin Gillani
Many people only believe in studying but we see it in practically. A game is played to judge the behavior of people, from which people have played a practical part and it has a different level. It is the special branch of economics. which is taught to us in very few places like AJK is the only university where we learn the subject of game theory.Where we see, what will be the outcome of what is to be done in practicall situations?We played a game in our class called prisoners dilemma.The detail of this game is under: The prisoner’s dilemma is a paradox in decision analysis in which two individuals acting in their own self-interests do not produce the optimal outcome. Today, the prisoner’s dilemma is a paradigmatic example of how strategic thinking between individuals can lead to suboptimal outcomes for both players. A prisoner’s dilemma is a situation where individual decision-makers always have an incentive to choose in a way that creates a less than optimal outcome for the individuals as a group. The prisoner’s dilemmas occur in many aspects of the economy. In the classic prisoner’s dilemma, individuals receive the greatest payoffs if they betray the group rather than cooperate. If games are repeated, it is possible for each player to devise a strategy that rewards cooperation. People have developed many methods of overcoming prisoner’s dilemmas to choose better collective results despite apparently unfavorable individual incentives. The prisoner’s dilemma presents a situation where two parties, separated and unable to communicate, must each choose between cooperating with the other or not. The highest reward for each party occurs when both parties choose to co-operate. The respective penalties can be expressed visually as follows: The example of prisoner Dilemma is below: we take the example of two robbers, Possible Outcomes of Prisoner’s Dilemma Outcome younas Accept younas reject. Afaq Accept (6,6) (0,9) Afaq Reject (9,0) (1,1) Penalties for (Afaq,younas) In this case, each robber always has an incentive to defect, regardless of the choice the other makes. From Afaq point of view, if younas remains silent, then Afaq can either co-operate with younas and do a six in jail, or defect and go free. Obviously, she would be better off betraying younas in this case. On the other hand, if younas defects and testifies against Afaq, then he choice becomes either to remain silent and do nine years or to talk and do one years in jail. Again, obviously, she would prefer to do the nine years over one. In both cases, whether younas cooperates with Afaq or defects to the prosecution, Afaq will be better off if he defects and testifies. Now, since Younas faces the exact same set of choices he also will always be better off defecting as well. The paradox of the prisoner’s dilemma is this: both robbers can minimize the total jail time that the two of them will do only if they both co-operate and stay silent (two years total), but the incentives that they each face separately will always drive them each to defect and end up doing the maximum total jail time between the two of them of six years total. What Is the Likely Outcome of a Prisoner’s Dilemma? The likely outcome for a prisoner’s dilemma is that both players defect (i.e., behave selfishly), leading to suboptimal outcomes for both. This is also the Nash Equilibrium, a decision-making theorem within game theory that states a player can achieve the desired outcome by not deviating from their initial strategy. The Nash equilibrium in this example is for both players to betray one other, even though mutual cooperation leads to a better outcome for both players; however, if one prisoner chooses mutual cooperation and the other does not, one prisoner’s outcome is worse. Can the Prisoner’s Dilemma Be Useful to Society? Prisoners’ dilemma problems can sometimes actually make society better off as a whole. A prime example is the behavior of an oil cartel. All cartel members can collectively enrich themselves by restricting output to keep the price of oil at a level where each maximizes revenue received from consumers, but each cartel member individually has an incentive to cheat on the cartel and increase output to also capture revenue away from the other cartel members. The end result is not the optimal outcome that the cartel desires but, rather, an outcome that benefits the consumer in terms of lower oil prices.