Prisoner's Dilemma


Definition: the Prisoner's Dilemma is a zero-sum game example of a Game Theory situation: 2 criminals are arrested under the suspicion of having committed a crime together. However, the police does not have sufficient proof to have them convicted. The 2 prisoners are isolated from each other and the police offers each of them a deal: the person that offers evidence against the other one will be freed. If none of them accepts the offer, both of them will get only a small punishment because of lack of proof. If one person betrays the other, he will gain more, since he is freed. But the other will receive full punishment.
Both prisoners are unable to make a good decision, because they don't know what the other will do.


More on individual decision making: Anchoring Bias, Bayesian Theory, Black Swan Theory, Bounded Rationality, Cognitive Bias, more...


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