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Chapter 4: resolving the prisoner’s dilemma
Prisoner’s dilemma’s remarkable feature is that both sides play their dominant strategy, thus maximize their payoff, and yet the outcome is jointly worse than if both followed the strategy of minimizing their payoff.
Reflection:
These who find themselves in a prisoner’s dilemma will look for ways to escape and achieve the cooperative outcome they jointly prefer. Others may like to see the players remain trapped in the dilemma. Whether we seek collusion or its opposite, we must understand the ways in which the prisoner’s dilemma might be averted. Then we can try to facilitate these ways or to block them as is appropriate in the case being considered. The underlying problem is the player’s incentive to cheat on any agreement. Therefore the central questions are, how can such cheating be detected? What prospect of punishment will deter it?