The prisoner's dilemma is a game analyzed in game theory that shows why two individuals might not cooperate, even though it is in their best interests to cooperate. Albert W. Tucker formalized the prisoner's dilemma game with prison sentence rewards. The police don't have enough evidence to convict a pair of prisoners on the principal charge. The plan is to sentence both to a year in prison on a lesser charge. The police offer each prisoner a Faustian bargain. If one testifies against his partner, he will go free while the partner will get three years in prison on the main charge. If both prisoners testify against each other, both will be sentenced to two years in jail.
In this prisoner's dilemma game, collaboration is dominated by betrayal; if the other prisoner chooses to stay silent, then betraying them gives a better reward, and if the other prisoner chooses to betray then betraying them also gives a better reward. The only possible outcome for two purely rational prisoners is for them both to betray each other. The interesting part of this result is that pursuing individual reward logically leads the prisoners to both betray, but they would get a better reward if they both cooperated.
There is also an extended iterative version
of the game, two purely rational prisoners will betray each other repeatedly. In an
infinite or unknown length game there is no fixed optimum strategy, and Prisoner's Dilemma
tournaments have been held to compete and test algorithms.
The label prisoner's dilemma may be applied to other situations. Two entities could gain important benefits from cooperating or suffer from the failure to do so.
There are many examples in human interaction as well as interactions in nature that have the same payoff matrix. The prisoner's dilemma is useful in economics, politics, and sociology.
Advertising is a real life example of the prisoners dilemma. Cigarette manufacturers endorsed the creation of laws banning cigarette advertising because this would reduce costs and increase profits across the industry.
In sports, If both athletes take drugs, the benefits cancel out and only the drawbacks remain.
Lance Armstrong and the Prisoners' Dilemma of Doping in Professional Sports -wired.com/bruce-schneier.
If two countries chose to arm, neither could afford to attack each other, but the cost is high. If both countries chose to disarm, war would be avoided and there would be no costs. If one country disarmed while the other continues to arm, then there is a problem. The 'best' outcome is for both countries to disarm, but the rational course for both countries is to arm.