ECON 1050 Chapter 15: Economics-1 (1) (dragged) 1
17 Sep 2016
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Document Summary
Game theory is a tool for studying strategic behaviour, which is behavior that takes into account the expected behavior of others and the mutual recognition of interdependence. All games have four common features: rules, strategies, payoffs, outcome. In the prisoners" dilemma game, two prisoners (art and bob) have been caught committing a petty crime. The rules describe the setting of the game, the actions the players may take, and the consequences of those actions. Each is held in a separate cell and cannot communicate with the other. Each is told that both are suspected of committing a more serious crime. If one of them confesses, he will get a 1-year sentence for cooperating while his accomplice will get a 10-year sentence for both crimes. If both confess to the more serious crime, each receives a 3-year sentence for both crimes. If neither confesses, each receives a 2-year sentence for the minor crime only.
