Game Theory

Notes

Game Theory is a branch of psychology and economics which according to it, interactions between people can be quantified in terms of preferences and expected utility from each action.

The classical case is the prisoner's dilemma. Two people are put in two different rooms, each one is given the option to either shut up or confess. The bottom line is that whether the other one confessed or not, its always good for you to confess. Creating a situation when both are worst off if they only had cooperated. This unfortunately shows that when we lack Trust, we might fall into worse outcomes than we would have been if we believed in each other and cooperated, and how best intensions can lead to horrible outcomes. It is all about the Incentives.

Meaning, that confessing is a dominant strategy and that the -1,-1 outcome is a nash equilibrium.

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Overview

🔼Topic:: behavioral psychology (MOC) ◀Origin:: 🔗Link::