Title Prisoners Dilemma

Seminar report
Subject: Subject code: Instructor: Prepared by: Branch: Course: Semester: Sl. No.: Software project management CS 800 Dr. K.C.Shet Arijit Mallik CSE M.Tech 1st 5

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Abstract This seminar report intends to discuss about a very interesting approach of game theory, known as prisoners dilemma. The two person games with the existence of prisoners dilemma reach a solution which is not the efficient one. Though there is a better option existing, the strategies of the players tend them to accept the less efficient solution.

Problem description The original example of prisoners dilemma as formulated by Dresher and Flood is closer to the following: Suppose two persons named Jack and Jane are suspected of having committed an armed robbery, and they are each placed in separate jails, with no means of communication. Some hours later, District Attorney enters their cell one after one. They are told that there is enough evidence to convict both of them on a lesser charge of illegal possession of firearms, but not enough to convict on the more serious charge of armed robbery. Now, they are given chances to confess, in the following conditions: 1. If neither Jane nor Jack confesses, they will both be convicted of illegal possession only, which carries a sentence of six months. 2. If both Jane and Jack confess, they will both get the minimum sentence for armed robbery, which is two years. 3. If only one of them confesses, that person will be considered a state witness, will be set out free, and the other will be sentenced for twenty years. Now, the best possible solution is that both of them stay quiet. But, surprisingly, we will find that they get into a dilemma about which strategy to choose, and finally chooses the second option, which is obviously worse than the first. This is known as prisoners dilemma. In the next section, there will be an explanation about this.

Explanation and solution Here, we can view the problem in the problem in terms of a 2x2 matrix (next page), where if we look at the values in each cell, the left one corresponds to Jack and the right one to Jane. If we look with respect to Jack, choosing the second strategy (i.e. confess) turns out to be better for him, irrespective of what Jane does. (Since, 0 < 6 months and 2 years < 20 years). Similarly, confess is the better strategy for Jane also. We call it dominant strategy, as it outplays the other strategy, irrespective of the other players choice.

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Jane

Dont confess Dont confess

Jack

Confess 20years,0 2years,2years

6 month,6month 0,20 years

Confess

Thus, we find a solution at where both of them confess. It is the intersection of two dominant strategies, and is known as the point of Nash Equilibrium, named after John Nash, the father of game theory. It would have been better if both of them hadnt confess, which gets them into the dilemma. But as per game theory, dominant strategy must be needed. They cant afford the risk of choosing the other, because if one confesses and the other doesnt, 20years of imprisonment will be there. Scope Many natural processes have been abstracted into models in which living beings are engaged in endless games of prisoner's dilemma. This wide applicability of the prisoners dilemma gives the game theory its substantial importance. In the actual problem, there is no way of communicating of the prisoners. But two firms may opt for a mutual agreement that if prisoners dilemma exists, no one will follow its dominant strategy. Instead, both of them will follow the other strategy which gives an optimal solution. Results Example 1 1. Table: (Figures denote profits in million rupees) 2. Problem type: 3. Output:
Firm 1 Firm 2

Advertise Advertise Doesnt advertise 30,30 20,50

Doesnt advertise 50,20 40,40

Maximizing, as both want to maximize the profit amount. Prisoner's dilemma exists. Dominant strategy for firm 1=1 Dominant strategy for firm 2=1 Better option For firm 1=option 2, for firm 2=option 2. Benefit for firm 1:10 more, benefit for firm 2=10 more.

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 Example 2 1. Table: (Figures denote profit in Million rupees) Reduce Price 90.90 110,80

Firm 2

Reduce price
Firm 1

Doesnt Reduce 80.110 100,100

Doesnt reduce

2. Problem type: 3. Output:

Maximizing, as both want to maximize the profit amount. Prisoner's dilemma doesn't exist but dominance property exists. Dominant strategy for firm 1=2 Dominant strategy for firm 2=2

Example 3
Firm 2

1. Table: (Figures denote profit by + And loss by -)

Producing
Firm 1

Producing Not producing

-60,-85 0,+70

Not producing +60,0 +50,0

2. Problem type: 3. Output:

Note:

Minimizing, as both want to maximize the profit amount. There is no specific dominant strategy.

All the above problems may be changed to minimizing problems by changing profits to losses and putting - sign in each figure. Output will be same.

Conclusion Whenever there exists the prisoners dilemma in any problem, is the problem hopeless? No. Prisoners Dilemma theory provides at least two ways out: 1. Enable communication to enable the formation of culture, to 2. Establish social codes which combat Prisoners Dilemma effects, while simultaneously creating a cultural organization, formal or informal, that enforces these social codes. (Best type is bottom-up as opposed to top-down).

References
1. Dresher, M. (1961). The Mathematics of Games of Strategy: Theory and Applications PrenticeHall, Englewood Cliffs, NJ. 2. Rapoport, Anatol and Albert M. Chammah (1965). Prisoner's Dilemma. University of Michigan Press.

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