What is Prisoner's Dilemma? | Real Life Examples & Explanation

4,064 views Wait, is this logic right? • Apr 11, 2023

Slog Reference: Evolution of Trust

Description

What is prisoner's dilemma in game theory? In this episode of FutureIQ, we explain the concept of Prisoner's Dilemma in game theory, a scenario where two rational individuals may not cooperate, even if it appears to be in their best interest. We provide an overview of what Prisoner's Dilemma is, how it applies in economics, and what the game entails.

Using real-life examples, we illustrate how this concept applies in situations such as business, politics, and even personal relationships. We also discuss how to win at Prisoner's Dilemma and the implications of the game for future interactions. By the end of the episode, you will have a clear understanding of the theory and how it can be applied in various contexts.

Hope you enjoyed FutureIQ by Navin Kabra and Shrikant Joshi. Do hit us up on Twitter:
@ngkabra http://twitter.com/ngkabra
@shrikant https://twitter.com/shrikant

Listen it on the podcast provider of your choice: https://tapthe.link/FutureIQRSS

Learn more interesting concepts:
Sensitivity vs selectivity: https://youtu.be/joF5dHhF3s0
Thinking like a VC: https://youtu.be/OAAYnb9LUsU

Links mentioned in the video:
Science Of Being Happy: https://youtu.be/reYUf2nkcQg
The Evolution of Trust Game: https://ncase.me/trust/

More Videos:
You’re the Reason Our Planet Is Dying - Tragedy of the Commons: https://youtu.be/u81mslnKOOA

Chapters:
00:00 Introduction
00:45 Rules
02:00 Permutations
05:08 Real life examples
07:20 Example 2
08:45 Relationships
09:18 Winning strategy
12:06 GDP
14:49 Exceptions
18:20 The new strategy

#futureiq #gametheory

Related Slog Matches

Evolution of Trust

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Transcript

- both of us will end up getting only one year you have to guess whether the other person is trustworthy or not have you put cameras in my home there's one more reason why you might not want to do things exactly like this that always trusting everybody is the right solution today I want to talk about a simple game which if you understand it properly it will help you improve your relationships it will help you in your career or business and it can improve the GDP of the country what game is this it's called prisoners dilemma a game that economists study and uh even people who know about it don't really understand how it is connected to all of these

0m 40s things I know what prisoners dilemma but the GDP of the country really we will get to that all right so uh this is a pretty simple game in this it's a two player game and both players are supposed to be uh prisoners who have been arrested by the police for a crime that got committed the police don't have a lot of evidence okay so based on that evidence they can put these people in jail just for one year okay but they are hoping to get more okay they're hoping that if they can convert one of those guys into uh this then he will testify against the other person other person goes in for three years and they will let this

1m 25s person go free so suppose you and I are the two people involved yeah the police get me to confess then I will go free because I helped the police yeah and you will go in for three years correct if you confess uh then I will go in for three years but you go free right if neither of us confesses or helps the police then we both one year each other one year each other okay the only tricky part here is that if both of them confess then both of them end up in jail for two years okay so what I have done is that I have drawn this table up here okay which shows that uh what I'm saying is the

2m 05s actions at each stage of the game that any one of us can take is that do you decide to trust your partner is your partner going to be on your side or the police side right if you decide to trust your partner then then we are not going to help the police officer so then what you can see is that both go to jail for one year so uploaded that as a minus one minus one one year jail okay but if player a trusts player B but player B decides to go uh for the police right you should not have been trusted so then player a goes in jail for three years and player B goes free

2m 48s the next one shows it's the reverse if player aim is trust and player B trusts then the other goes for three years and one goes caught free and if both mistrust then both go to jail for two years okay clearly both going to jail for two years doesn't help anyone so that should never happen right daily yeah but tell me if you were in the situation given these are the the results uh by the way in Game Theory these results are called payoffs okay so what you get as a result of playing your game what would you do see I am a very interesting person by Nature so I am more likely to Hope slash

3m 29s believe that my partner in crime is also going to be like me and not snitch on me and both of us will end up getting only one year although if I were a selfish person I'd probably be like he did it and I'll go run away yeah so that is what this game is about okay uh do you trust or do you not trust okay okay and uh this game has been analyzed by economists and mathematicians for a very long time in fact I want to talk about uh uh competition that has been happening since 1982 where uh people submit their strategy for how to play this game okay from 1982 that's nearly my age yes

4m 17s that's a long time to be playing this one game bye we will come to examples of why this is such an important game to play and understand looking forward to them seriously but uh do you realize the following that if you knew beforehand that somebody is not a trustworthy person then you should not be trusting them right you should also uh I mean by the way this is called uh in-game Theory the words used are cooperate and defect okay cooperate means you're cooperating with your friend you're both uh not uh confessing okay and defect means you decide to sell your friend and stabbing in the back tab in the back defective stab in the back

4m 59s okay now if you knew that the other person is not a trustworthy person you should defect so otherwise tell me something where in real life will you find examples of this happening I understand prisoners of having this scenario with the cops but yeah in real life does this really happen does this situation ever arise so uh one example is suppose there is a city and there are two businesses both selling uh school uniforms okay okay and everything is going along fine both are selling this shop gets half the business that shop gets half the business fair enough okay now both of them have to decide whether to start advertising or not oh okay so let's see

5m 46s what happens if neither of them advertises out of them are getting half off if one advertises and the other doesn't money goes up right a profits go up and the other one goes down so this is just like the zero three zero minus three situation and the reverse is also true if this shop advertisers and the first one doesn't yeah right whichever shop advertisers gets the larger share of the revenue that's the share of the market but if both of them advertise their advertisements cancel each other out and they're both back to where they started but they have now lost money on their advertisements I would call that losing money the advertisers still make money

6m 31s so yes but you know let's understand the I mean yes advertisers exist and that's a good thing but let's understand from the point of view of the two shop owners right yeah so if both of them advertise they are worse off right correct and so that is equivalent to the minus two minus two situation true right and if both of them don't advertise then it's the win-win situation that you want right but that makes sense there is an incentive for one of them to defect and what does defect mean in this case advertise over the other not advertising correct and then make a lot of money yes right yes so you can understand why analyzing this game and finding a

7m 12s winning strategy can be important in business fine but okay I need another example okay uh there's a bachelor okay who needs to go to work at UH nine o'clock and he needs to employ someone to come in and clean the house clean clothes fair enough that person says she says she would like to come in at 11 o'clock because she has her own children to take care of before nine o'clock okay that also happens on a fairly regular basis Now The Bachelor has to decide whether to trust her with the key okay or not trust her and he has to then wake until 10 o'clock and then reach late have you put cameras in my home yes

8m 00s so again you see it's the same situation yes if they both trust each other then they're both better off win-win situation if he trusts her huh and she decides to steal something from his house then then she is better off and he is much worse off zero minus three correct the reversion can also be true and both of them is trust each other then they are just like you know he is late to work and she has she's like he has her looking over her in an unjustly hostile work situation yeah that entire situation becomes hostile work environment and whatnot so yeah true that uh that resonates with a lot of people I'm assuming me or me I don't

8m 45s know even in your relationships all your long-term relationships your friendships you can end up in trust trust scenarios corporate corporate scenarios where both of you are better off or you can end up in defect defect uh situations where you don't trust the other person the other person doesn't trust you and then you have a horrible relationship where you keep thinking of things from five years ago when that person was bad and bringing up those relationships right yeah sounds like a lot of marriages I know yes yes understanding this does help okay so what is the winning strategy yes okay so I told you this game is being played from 1982 where the top Minds in Game

9m 28s Theory and computer science algorithms they submit algorithms and what the algorithm is trying to do you think that always trusting everybody is the right solution no it doesn't make sense if I encounter a person who is prone to cheating and who is you know selfish so that person is always going to uh defect no matter what I try no matter what I do so always trusting is never a good strategy well as in you're now disagreeing with Jesus Christ and gandhiji but even I agree with you that always trusting is not I mean people are just going to take advantage of you yeah I have seen that happen yeah right the question is that you have to guess

10m 09s whether the other person is trustworthy or not and then you will decide whether to play cooperate or play defect okay right and those algorithms have very sophisticated analysis to guess whether the other person is going to defect or not okay okay and of all the top algorithms every year do you know what algorithm has been winning it's a very simple algorithm I wonder if it is the algorithm that always cheats no always cheats always ends up a c an algorithm starts cheating always very soon yeah always defect very soon the other people realize that cheating is going on and they also start defecting and then you are stuck in a defect defect Loop you are continuously

10m 58s defecting against each other both of you are worse off yeah right so that doesn't work what and of course always cooperate also doesn't work it has been shown again and again that always cooperate gets taken advantage of and does very badly in this what really wins the game every year against all the sophisticated algorithms against all AI ml algorithms is it for that just remember what this person did against me last time if they cooperated I cooperate if they Defector I defect that's it that goes against what Jesus Christ and Mahatma Gandhi said by the way he was just saying that but as a benchmark um when it's the question of deciding whether to give your house key to the

11m 47s maid or not huh nobody remembers Mahatma Gandhi right everybody what they should be doing is this trust that person and then see if the trust is Justified but verify trust but verify that's what click for tag is okay okay uh so let me bring it back to the original question what does this have to do with GDP okay so um there is a another interesting survey that's being done for many years it's called the world value survey where they ask questions about values of people in different countries and one of the questions in that is called the trust question and what they ask is do you think people can generally be trusted that's it that Vega question yes and

12m 36s then uh you see what fraction of the people in any country say yes okay okay so in Sweden around 60 61 percent say yes people are trustworthy okay in places like Colombia and Brazil what do you think nah very few people less than 10 percent right in India it is around 28 30 okay okay so three out of ten people think that people can be trusted in a country if more people trust other people what do you think is going to happen to all the prisoners dilemma games that they are playing in their businesses in their relationships in their their alliances cooperate and if tit for that is the general principle in life then cooperate will lead to more

13m 24s cooperate will lead to more more more so everything will be cooperative so you can see how productivity will be higher in a country like this conversely huh in a low trust country you can see that nobody trusts each other so they are spending more time guarding each other more time spending uh staying home until 11 o'clock and not going to office and things like that so you can see how productivity is lower yeah so economists actually plotted a graph they put on the y-axis they put the GDP per capita of a country on the x-axis they put the trustworthiness worthiness score of the country and you can see it's a nice correlation in fact there are some

14m 06s economists who believe that a one percent increase in the trustworthiness of a country can lead to a one percent increase in GDP that's huge trust me bro trust me yes so that's why this is so important I I can definitely see how it becomes a matter of national importance now um so uh so India with 30 percent of trustworthiness can get a much higher GDP if we begin trusting each other a little bit more absolutely nice nice so now this begs the obvious question is this principle always applicable to you always of course it doesn't make sense to always trust and always cooperate with others but how does the Tit for tag principle so I think there are three important

15m 00s things to keep in mind first of all not all games are prisoners dilemma games okay okay because uh when you are playing a sport right Virat Kohli can't tell the bowler key or just you know ball slowly so I can also chill and relax both of us relax we go home happy yeah imagine that happening in an india-pakistan match by for us yeah so there's an entire category of games called zero-sum games which are not prisoners dilemma and Tit for Tat is not a good strategy another one that we will talk about in a different episode is a game of chicken right okay and so if uh you know in a ransom situation huh somebody's taken a hostage you're not

15m 45s going to do tit for tag that's good yeah it's very different depending on the game that is first second is that there is a difference between playing prisoner's dilemma once versus playing it for a long time with the same person right okay so if you are going to be interacting with that person on a regular basis then the Tit for Tat strategy makes sense yes but if it is going to be a one-off interaction always defect makes sense if it is a one-off interaction right and you can see that I mean on the last day of work when a person is fired you can see that suddenly it has changed from a prisoner's dilemma iterated business

16m 29s dilemma game to a single shot prisoners dilemma game okay and you know that this person has a very high incentive to defect what is defect if for an employee who's uh in a company uh you know uh there are many things that come to mind but I will not be speaking them out loud so which is why if somebody is being fired their access is revoked before their fire Twitter employees in the chat what's up drop your name and uh X designations below before this episode did you think that firing a person would be explained by the game like this no no I didn't I didn't even equate the possibility of firing a person and prisoner's dilemma

17m 14s and putting them in the same room but also remember that the employer employee relationship is also an iterated business dilemma and if the employer trusts the employee and the employer he also has the best of the company in mind it's a good relationship both benefit but if there is a low Trust Company then both hate it and it's a problem that's an interesting uh thought experiment if you want to go ahead do it and post your thoughts in the comments below what happens when a trustworthy employer loses a trustworthy employee through firing or through whatever reason what is the possibility of what is the possible scenario that can come out of that uh firing or exit or whatever no I

17m 57s would ask a different more interesting question okay right when an employer loses the trust of an employee without firing what happens right how the work environment changes how the productivity changes right think about those things but I want to move on right I hear the word quiet and I hear the word quit and I'm not sure what that means but sure it's nothing I'm sure go on so there is one more reason why you might not want to do things exactly like this pure tit for tag okay imagine a situation in which you and uh partner right you trust each other okay and then partner does something which is just completely you don't like at all right now does this

18m 45s mean that you go into tit for attack mode and then you do something nasty in return no I trust the partner right right so I am going to sit down and have a chat I mean thinking as a human being I will sit down with a partner and what you are thinking here is your first thought isn't oh my God they're defected right your first thought is there was maybe there was some miscommunication maybe there was a mistake right something like that so uh in fact when I said that Tit for Tat always wins that is not true it always won for the first 15 years or so after that a new strategy started winning and the new strategy is

19m 21s Tit for Tat with forgiveness that you if you see an example of defect you don't immediately go into tit for Attack Mode what you do is you assume there might have been a miscommunication you forgive in the game you forgive once in real life you might forgive two three times only when it becomes a pattern of defects that's when you switch over to defect so Mahatma Gandhi and Jesus are both right you have to forgive learn to forgive yeah don't overdo it okay of course that is the reality yes so Mahatma Gandhi Jesus Christ and Gita all together form the ideal strategy for solving the prisoner's dilemma yeah one very important thing I want to mention is that there is a

20m 07s online simulation of this game called the evolution of trust we will put the link with the video uh it takes about half an hour to go through that simulation and play those games even kids are small as six years old can play it but it is phenomenal it really really teaches you when and how to trust somebody the importance of trust and how in a small Society how trust builds up or mistrust builds up right and how little things like you know forgiveness uh can make a difference Also it talks about different strategies which you can play this game with and how those strategies do in different environments highly recommended we'll definitely put that link in the description and uh yeah

20m 54s prisoners dilemma who would have thought it would connect uh personal relationships and the GDP of a country but it does and that's what Naveen here taught us today my name is srikanth this is Naveen and uh this was future IQ bye