A Brief Explanation Of The Prisoner's Dilemma

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Purpose: Introduction/background of problem The purpose of this discussion is to give a brief explanation of the Prisoner’s Dilemma game, the notion of dominant strategy, and the concept of Nash equilibrium and cooperation. The Prisoner`s Dilemma game helps us understand what governs the balance between cooperation and competition in business, in politics, and in social settings (Dixit & Nalebuff, 2008). An example, of a traditional method of this game is how a school principal resolve student conflicts by talking to both parties involved to determine the circumstance of the event that occurred. The strategy in this method is to try and determine the truth by listening to two conflicting stories of events. The Prisoner`s Dilemma in economics can be applied when we look at competing business and how they market their products to receive the best possible revenue. An example of this is the automobile industry and how to compete with one another for customer sale through competitive pricing and incentives. The notion of dominant strategy is the notion that one strategy is better than the other and this notion could typically give one side an advantage over another. This is great information to have but it all depends on how this information is implemented in a company’s business practices. The concept of Nash equilibrium and cooperation is a concept that was developed by a mathematics graduate named, John Forbes Nash. The idea of the Nash

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