Economics: Difference between revisions

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=== Opportunity cost ===
=== Opportunity cost ===
=== Prisoner's Dilemma ===
=== Prisoner's Dilemma ===
* each prisoner does not know what the other will choose, so they choose the most beneficial to themselves
* the "prisoner's dilemma" represents a clash of individual versus group interests
** "dilemma" = a problem for which the solutions all reach a negative outcome
*** as opposed to a "paradox"
**** which is a problem that has no solution, the solution is never-ending, or the solution yields an outcome that negates the original problem
* in the prisoner's dilemma, two prisoners must select between 1) confess to the crime or 2) remain silent
** each is held separately and does not know what the other will choose
* Option 1 choices:
** Prisoner 1 (P1) confesses
** Prisoner 2 (P2) remains silent
** outcome: P1 goes free & P2 serves the worst jail sentence with no chance for parole (no chance to be let out of jail early)
* Option 2 choices
** P1 remains silent
** P2 confesses
** outcome: P2 goes free & P1 serves the worst sentence
* Option 3 choices:
** both confess
** outcome: both serve the worst jail sentence but will be allowed "early parole" (let out early)
* Option 4 choices:
** both remain silent
** outcome: both will face a lesser charge and less jail time
{| class="wikitable"
|+Prisoner's Dilemma Choice Matrix
!Option
!Best outcome
individually
!Worst outcome
individually
!Worst outcome
collectively
!Best outcome
collectively
!Highest risk
indivdiually
!Lowest risk
individually
|-
|'''Option 1:'''
* P1 confesses/
 
* P2 remains silent
|P1 goes free
|P2 serves longest term
|↑
|
|↑
|
|-
|'''Option 2:'''
* P2 confesses/
 
* P1 remains silent
|P2 goes free
|P1 serves longest term
|↑
|
|↑
|
|-
|'''Option 3:'''
* both confess
|
|
|
|↑
|
|
|-
|'''Option 4:'''
* both remain silent
|
|
|
|↑
|↑
|
|-
|
|
|
|
|
|
|
|}
 
*
*
* the most potentially beneficial option for themselves individually, they both will serve the longest jail term
 
* however, if both choose the  
** even if choosing collectively would be more rational & mutually beneficial
** even if choosing collectively would be more rational & mutually beneficial
* see https://plato.stanford.edu/entries/prisoner-dilemma/
* see https://plato.stanford.edu/entries/prisoner-dilemma/