1. Prisoners’ Dilemma and Its Implications

2. What is Prisoners’ Dilemma? AlternativesConsequences Prisoner APrisoner B A’s sentenceB’s sentence Keep quiet 1 year Keep quietConfess and squeal 10 years0 year Confess and squeal Keep quiet0 year10 years Confess and squeal 3 years There is not communication between the two prisoners. What would each prisoner do?

3. A Problem of Game Theory The prisoners’ dilemma is a problem in Game theory. It is non-zero-sum game.

4. Penalty Table for Prisoners B QuietSqueal A QuietA: 1B: 1A: 10B: 0 SquealA: 0B: 10A: 3B: 3 The numbers in table represent years of sentence.

5. Prisoners’ Strategy The strategy ‘keep quiet’ is called ‘cooperation’, while ‘confess and squeal’ is called ‘defection’.

6. A’s Contemplation (1) “Squeal” would make me better off no matter whatever B does, since –If B “quiet”, my possible penalty would be 1 year (if I “quiet”), or 0 year (if I “squeal); –If B “squeals”, my possible penalty would be 10 years (if I “quiet”), or 3 year (if I “squeal”)

7. A’s Contemplation (2) “Squeal” would make my penalty no worse than B’s, while “quiet” would make my penalty no better than B’s: –If I keep “quiet”, our penalties would be A:1/B:1 or A:10/B:0, –If I “squeal”, our penalties would be A:0/B:10 or A:3/B:3.

8. Rational Choice A’s rational opportunistic choice is “Squeal” (defection). Similarly, B’s rational opportunistic choice is also “Squeal” (defection).

9. Disappointing Outcome Since both A and B select “squeal”, they both get 3 years in jail. If both kept “quiet”, then each would get only 1 year. Each one pursues the best for his own. But they end up with failing to get their best.

10. Dilemma Around Prisoner’s dilemma exists around us. It reveals, tragically, the behavior pattern of interacting people. –Natural choices of individuals lead to mutual damage and mutual destruction. –Disparity between individual rationality and group rationality

11. Riding on Crowded Bus AlternativesConsequences Individual XOthersX’s waiting time Other’s waiting time stay in line 8 minutes stay in linenot stay in line>360 minutes30 minutes not stay in linestay in line0 minute8.1 minute not stay in line 30 minutes Individual X’s rational strategy: Not stay in line.

12. Corruption Company A and B are competing on a bid of a project Penalty: 0 = win the bid for sure; 1 = not sure to win, without bribing; 2 = not sure to win, even after bribing; 3 = lose the bid for sure. Company B Do not bribeBribe Company A Do not bribeA: 1B: 1A: 3B: 0 BribeA: 0B: 3A: 2B: 2 Rational strategy for A and B: Bribe

13. Punctuation Peruvian government announced a campaign (Jan. 2007) to stamp out “Peruvian time” (one hour late). In a poll, 80% said they are punctual, while only 3% think others are too. Penalty: 0 = No waiting; 1 = Wait for some short time; 2 = Having to wait for a long time, definitely. Person B Being PunctualBeing Late Person A Being PunctualA: 0B: 0A: 2B: 0 Being LateA: 0B: 2A: 1B: 1 Rational strategy for A and B: Being late.

14. Equilibrium Equilibrium is a status of balance in stable, such that any deviation would be corrected automatically back to the original status. A C B X Y Z

15. At Equilibrium: Disorder Defection is, unfortunately, at equilibrium –If both are taking defection, then any attempt to give up ‘defection’ would be penalized. Therefore, unfortunately, disorder is at equilibrium, while order is not. disorder order

16. What Prisoners’ Dilemma Implies? People would naturally give up “win-win” outcome associated with cooperation, and take defection which leads to mutual damage. Rational individual behaviors add up to irrational and self-destructive group effect. Social order can be stable, but not at equilibrium.

17. Vulnerable Social Order It takes a long time to build up civilization and order of a society, which looks stable. Prisoners’ dilemma tells that it can collapse in moment due to a natural disaster (Katrina, earthquake), war, terrorist attach, or even a big sale. Once order is broken, it cannot come back automatically without some force outside.

19. Causes behind Prisoners’ Dilemma Lack of communication. Distrust between people. Egoism which is natural.

20. To Strengthen Social Order Reduce penalty of cooperation by e.g. increasing social wealth; Increasing penalty of defection by e.g. law enforcement. Enhancing communication between individuals, people groups, and countries.

21. Law of Entropy Entropy is a measure of randomness or disorder in a system of thermodynamics. The second law of thermodynamics says “the total entropy (disorder) of an isolated system tends to increase over time, approaching a maximum value."

22. Is Disorder Our Destiny? Factor of penalty on cooperation –The larger the penalty on cooperation, the more likely people would take defection. So, reducing the penalty on cooperation is an effective way to set up and maintain an ordered society. Comparing developed countries and developing countries.

23. Prisoners’ Dilemma Plus Chicken Game “Disorder” is equilibrium status in prisoners’ dilemma. “Destruction” is equilibrium strategy in chicken game. Both are effecting on our society, - How about our destiny?

24. Arms Race Payoff Table (numbers show benefits in terms of security and expenditure) Country B Arm expansionDisarmament Country A Arm expansionA: 1B: 1A: 3B: 0 DisarmamentA: 0B: 3A: 2B: 2

25. Destruction of nuclear weapons Payoff Table: Numbers denote the payoffs in terms of security, and cost and risk of keeping nuclear weapons Country B Keep nuclear weapons Destruct all nuclear weapons Country A Keep nuclear weapons A: 1B: 1A: 5B: 0 Destruct all nuclear weapons A: 0B: 5A: 3B: 3

26. R&D on Doomsday Techs Payoff table: Numbers denote long term national benefit and security, and cost of R&D. Country B FundingBanning Country A FundingA: 1B: 1A: 5B: 0 BanningA: 0B: 5A: 3B: 3

27. Democracy in Latin America Latin American democracies of the sixties and seventies collapsed. In Chile and Brazil, moderates on the left and the right knew the benefits of coming to a mutual agreement on socio-economic reforms. Yet each feared that, if it cooperated, the other side could gain by colluding with the radicals. Unwilling to take this risk, moderate groups in both countries splintered and joined the extremists. The resulting disorder opened the way for military control.