Example of Prisoner s Dilemma in Tolkien s Hobbit The Art of Strategy

Ch. 3 from Art of Strategy

As Dixit and Nalebuff (2008) show, the prisoner’s dilemma is a classic example of game theory, in which two players must choose between cooperation and competition. The traditional formulation of the prisoner’s dilemma goes as follows: two criminals are arrested and interrogated separately. If both criminals cooperate and confess, they will each receive a light sentence. However, if one criminal confesses while the other remains silent, the confessor will go free while the silent criminal will receive a heavy sentence. If both criminals remain silent, they will each receive a moderate sentence. As you can see, there is a strong incentive for both criminals to confess, even though it is not in their best interest to do so.

What makes the chapter interesting is that it shows how prisoner’s dilemma can be applied to many real-world situations. For example, it can be used to explain why companies compete against each other even when it would be more profitable for them to cooperate. It can also be used to understand why countries go to war even when it would be better for them to remain at peace. In short, the prisoner’s dilemma is a valuable tool for understanding human behavior.