Risk Tolerance and the Prisoner's essay

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B. Research Design Rationale

1. Question format: In order to allow the research study to become embedded in the field of economics, the research question will use an applied question format. The purpose of the study is to develop a predictive method regarding player choices in the Prisoner's dilemma. It will explore the association of risk and cooperation or defection in the Prisoner's


2. Research design: The research will use a deductive approach where the theory will be presented and tested through the methodology. The research will use quantitative research methods, which are suited for research where the information can be reduced to a numerical format. This is the case in the proposed study as both risk tolerance and the decisions made in the Prisoner's Dilemma can be reduced to numerical data and standard statistical methods applied.

III. Data/Information from Previous research

A. Literature Review

The literature review for the study will be divided into several sub-headings, as several different areas of study must be addressed. This is original research and it is expected that very little research will exist on the exact topic to be studied. The following sections and sub-sections will be explored in order to gain a thorough understanding of the research problem.

1. Risk Tolerance and Behavior: This section of the Literature review will explore research on the connection between risk tolerance or risk aversion and behavior. This area has received considerable academic attention in recent years.

2. Risk Tolerance and Motivation towards Selfish or Cooperative Action: This section of the research is expected to yield a lower number of actual studies, but is it is targeted more specifically to the problem that is being researched. This will be essential research in understanding the predictive merit of risk tolerance in the Prisoner's Dilemma.

3. The Prisoner's Dilemma: The Prisoner's Dilemma in relation to Game Theory has been studied many times. This section will explore the various studies that have been conducted on the Prisoner's Dilemma. It will only address those that address topic in economics, as this concept has been expanded to included many other areas of study that are not related to economics or the question to be addressed.

4. Game Theory and Competitor Actions in Various Markets: This section of the literature review will e essential in the ability to apply the research to economics and to practical problems that exist in the world today. As the global economy becomes more integrated and companies are faced with different decision than they were in the past, they must often make decisions regarding whether to form alliances with former partners, or whether to defect and protect their own market share. This section of the literature review will examine risk and game theory relate to these decisions. It is expected that a wide body of research will be found on this topic area.

IV. Data Analysis

A. Statistical Analysis

1. Risk Tolerance Data: Risk Tolerance data will be separate from Prisoner's Dilemma data collected from the game. Risk Tolerance surveys will be given, producing a number along a scale that ranges from high risk tolerance to low risk tolerance. This number will follow the subject throughout the study and will be directly tied to a specific study participant.

2. Prisoner's Dilemma Data: Each subject will be paired with another person and they will play 25 rounds of the Prisoner's Dilemma. The reason for multiple rounds is that eventually, each player gets to know the other player and will make decisions based on what they think the other will do.

This is the point of the game. Their scores will follow them, as with the risk tolerance score. No effort will be made to pair high risk takers with low risk takers, or any other combination. This data will result a group of scores for each player for each of the 25 rounds. The data will be analyzed as to whether the player was a cooperator or a defector a majority of the times.

3. Correlation: Game player pairs will be divided into several categories according to their risk tolerance scale results. The direction of the pairing will be insignificant the categories of player pairs will be as follows.

a. high tolerance to high tolerance

b. high tolerance to low tolerance

c. low tolerance to low tolerance

4. Prediction: The hypothesis of the study will state that risk tolerance scores will be predictive or actions in the Prisoner's Dilemma Game. Prisoner's Dilemma data will result in the players being further categorized as cooperators or defectors. Combining these categories with risk tolerance data will result in the following subject categories: high tolerance/cooperator, high tolerance/defector, low tolerance/cooperator, and low tolerance/defector. If the hypothesis holds true a person who is high tolerance be more likely to be a cooperator and low risk tolerance persons would be more likely to be a cooperator. The percentage or subjects in each category will be compared to demonstrate whether the hypothesis holds true or not.

V / Discussion/Conclusion

A. Discussion

The implications of the study results will be discussed. This section will discuss how the results of the study can be applied to real-world situations and the changing competitive landscape of the global economy. It will discuss future research that needs to be addressed in this area. It will tie the results of the study together in a way that reflects a contribution to the study of economics.

B. Conclusion

This final section of the study will summarize the research and present the final conclusions that can be drawn regarding the hypotheses and research questions.

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