You have seen an example of Nash equilibrium: Prisoner\'s Dilemma. Both prisoner

Question

You have seen an example of Nash equilibrium: Prisoner's Dilemma. Both prisoners confess and each of them will be in prison for 6 years. This outcome is worse than the case that both are silent (in which case each of them will be in prison for 2 years.) This situation occurs because they are selfish and are trying to maximize their own benefit. Now, suppose that they behave in an altruistic manner: they are always trying to maximize the other's benefit and ignore their own benefit. What is the possible outcome (Nash equilibrium) this time? 1. Nash equilibrium does not exist in this case. 2. One of them confesses and the other is silent. 3. Any situations are possible. 4. Both confess and will be in prison for six years. 5. Both are silent and will be in prison for two years.

Explanation / Answer

Y..ou have seen an exam.ple of .Nash equilibriu.m: Prisoner's Dilemma. Both prisoners confess and each of them will be in prison for. 6 years. This outcome .s .s.e that both are silent (in which case each of them will be in prison for 2 years.) This situation occurs because they are selfish and are trying to maximize their own benefit. Now, suppose that they behave in an altruistic manner: they are always trying to maximize the other's benefit and ignore their own benefit. What is the possible outcome (Nash equilibrium) this time?

5. Both are silent and will be in prison for two years.

Explanation - This would place them in fourth quadrent of Nash equlibrium and create a stiation by remaining silent leading them to prison for two years.

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