Lessons of the “Prisoner's Dilemma” for Real Life

Posted by Keith Tidman

The ‘prisoner’s dilemma’ is a classic example of game theory and a tool for decision-making, where two rational, independent players must choose between cooperation and conflict to arrive at what’s perceived as the best outcome. Central to the interactive nature of the game is that the payoff (optimal or otherwise) for any single player deliberating his or her decisions and the consequences of those decisions hinges on the strategies that the other player chooses to implement according to assumptions and rules.

The prisoner’s dilemma was the product of modeling work performed in 1950; however, it was the mathematician Albert Tucker who ultimately structured and named the thought experiment as we know it today. The standard description of the prisoner’s dilemma runs along these lines:

Two prisoners are being interrogated apart from one another for crimes they are believed to have committed jointly. Although officials have enough evidence to convict both suspects on the lesser of the two charges, they have insufficient evidence for a conviction on the more severe crime they’re suspected of. The prosecutor, therefore, simultaneously but separately offers each prisoner a plea deal. The deal offered is either to provide information adequate to convict the other suspect in an act of betrayal, or to remain silent and refuse to testify, this being in effect a form of continued cooperation with their fellow prisoner.

There are three ways the preceding situation may play out:

• If both prisoners refuse to talk about their involvement in the main crime — that is, they cooperate with each other — they will both serve only one year (for the lesser crime). 

• If one prisoner refuses to talk, but his partner chooses to betray (implicate) the other regarding the main crime, the silent prisoner will be sentenced to three years while the testifying prisoner will be set free. 

• If, instead, both suspects implicate each other, both will fetch a sentence of two years.

The thought experiment is supposed to illustrate that neither prisoner has faith that his accomplice will stay tight-lipped, so both prisoners cannot resist testifying, with the tantalising hope of going free. These supposedly rational prisoners therefore pursue their self-interest, implicating each other. But the result is that both prisoners end up serving two years instead of one year if both had remained mum.

The lessons of the prisoner’s dilemma have been applied to many real-life, non-zero-sum situations. In such situations, cooperation results in better outcomes for all parties than if each party single-mindedly chases his or her own interests (rather than mutual interest) in order misguidedly to gain advantage over the other. So, for example, individually self-interested decisions can lead to injurious consequences for all. There are many everyday instances of the dilemma playing out, cutting across diverse behavioural arenas, such as economics, politics, biology, psychology, sports, academia, business, commerce, the workplace, and more. I'll briefly describe one particular instance.

In international strategic positioning, one theory assumes that all states ultimately compete rather than cooperate, their decisions reflecting rational self-interest to acquire advantage. For example, during the seventy-year Cold War, the phalanxes of NATO and the Warsaw Pact faced three options:

• Both sides endlessly scramble to deploy ever-more-advanced nuclear and conventional weapons to protect themselves and menace others, this being a policy with enormous, hard-to-sustain economic cost;

• One side greatly expands and enhances its forces while the other side doesn’t, the latter fearing betrayal and placing itself in peril while, on the upside, conserving its economic resources;

• Or both sides agree to disarm, thus reducing the probability of war while both avoid the massive expense of highly robust militaries.

It seems that the last of these choices, cooperation, would have led to the most desirable shared outcome; however, the delusion of ‘rational self-interest’ — doggedly pursuing individual reward — led both alliances to arm to the teeth, escalating the chance of conflict while hugely taxing both economies. Eventual arms-control agreements, though shaky and often tested, attempted to showcase cooperation, albeit fed by acute wariness: to keep a first-strike advantage out of the opposition’s hands.

The fragility of such agreements has been evident recently, in the fraught pursuit of arms control between the West and North Korea (with an already-existing nuclear arsenal) and the West and Iran (with an incipient capability, along with a presumably quick breakout to deployed nuclear weapons). In prisoner’s dilemma fashion, the resultant policies have reflected rational self-interest more so than cooperation, goaded by various motivators: 

• Distrust over intent and betrayal, such as ‘regime change’; 

• Anxiety over cheating and existential threats;

• Incendiary rhetoric threatening obliteration; 

• The honest-to-goodness objectives that skulk below the public pronouncements;

• Risk of later repudiation of agreements; 

• Bristling at the opposition’s negotiation tactics, where cultural differences intrude. 

Thus far, outcomes, such as they are, have mirrored these dynamics of distrust and antagonism, stemming from what is sometimes referred to as the Hobbesian trap, where parties default to tit-for-tat parrying over non-cooperative prisoner’s dilemma strategies.

Few circumstances, however, quite rise to the level of conforming to the idealism captured by John Rawls’s assertion that:

‘The hazards of the generalized prisoner’s dilemma are removed by the match between the right and the good.’

Yet, the prisoner’s dilemma thought experiment does bear upon many real-life situations that decision-makers around the world tackle daily. Scenarios that reflect how the push–pull between cooperation and conflict, as well as outcomes and payoffs, become complex — the more so with multiple parties in play, as in the example of strategic defence just described.

Another case involves the environment and global measures to mitigate serious threats emanating from climate change, as well as from the dilated timeline for halting or slowing the trajectory of that change. The key goal being to yield benefits shared across national borders. The self-serving interests so often associated with prisoner’s dilemma thinking — and the assumption that other countries will shoulder the burden of changing policies that harm the environment — might result in even developed nations keeping performance targets easy. 

The purpose would be to protect themselves from social and economic disruption, as well as not to be taken advantage of in, say, lowering pollutants. Meanwhile, yet other countries may silently breach the Paris climate accord and the agreements reached recently in Katowice, Poland — neither of which arguably provides adequate confidence in the ‘fair play’ of others, provides sufficient metrics and accountability, proves demonstrably enforceable, or meaningfully disincentivises cheating.

Despite, therefore, the apparent win–win payoff that can stem from cooperation, from focus on mutual interests, and from trust-building, the strategic application of the prisoner’s dilemma in seeking maximum payoffs may still lead to parties succumbing to the myopic illusion of advantaged self-interest, and the delusion of being able to avoid incurring costs as a consequence.