The Prisoner’s Dilemma is a model that illustrates a conflict between the interests of individuals and the interests of those individuals as members of a collective or group. In most versions of the game, two or more persons can cooperate and receive a collective reward that is greater than the sum of individual rewards they could earn if they choose not to cooperate. The incentives of the game are such that the persons have an individual incentive not to cooperate, thus making them collectively worse off had they chosen to overlook their individual interests and instead think as a group. The game is famous in economics and other social sciences. Wikipedia has a lengthy discussion of the game, its refinements and implications here.
Even though the Prisoner’s Dilemma has been around for decades it is still a fun game to play with students. In my microeconomics class today I offered the following opportunity for the class to earn extra credit:
“You can earn extra credit by selecting the amount of extra credit points you want. However, if more than 4 of you select option B, then the entire class will receive 0 extra credit points.”
Option A was to earn 1 point extra credit.
Option B was to earn 4 points extra credit.
I use a web-based student response system so that students could register their choice on their cell phones and I would see the results immediately. Not surprisingly, of the 180 in class today, 10 chose option B, leading to no extra credit for the class. When I gave the class a chance to do it over again and even talk to each other, the number who chose option B increased to 17.
The incentives to choose option B are pretty strong here — getting 3 more extra credit points than one could get by cooperating with everyone else in the class and getting just 1 point. Even when I changed the payout structure so that option A gave 3 points and option B 4 points, there were 6 students who still chose option B, thus negating the extra credit opportunity for everyone.
What I find interesting here is not that there were some students who chose option B but that so many in the class chose option A. At least 90 percent of students were willing to forgo their individual interest of choosing option B in order to cooperate for the collective good.
In economics we teach that when people pursue their self-interest things will work out the best for everyone. But sometimes they don’t. Sometimes the pursuit of one’s interests can be damaging to others and the collective whole. Why does self-interest work in some cases but not in others? And when the incentives for collective action are not ideal, what can we do to encourage or promote more cooperative thinking and behavior?
Russell Crowe, in the movie A Beautiful Mind, played the mathematician John Nash who developed this idea. He explains the problem and solution nicely in this clip from the movie.
I asked my class these questions and got a lot of interesting responses. Because the student response system I use saves student responses, I can list some of them here:
“Anonymity is the problem”
“People only act in their self interest and don’t want to work as a whole for the better of everyone”
“so basically we need to be communists in order for this game to work”
“People are greedy”
“people think they deserve it more than others”
“Throw tomatos (sic) at the people who chose B”
“you do what you have to do”
“Take away the second option”
“build a wall make the people who picked B pay for it”
“this game don’t work cause we got more than 4 selfish people in class”
“Not as many laws and restrictions”
“Because people think that everyone else will pick A and that they will end up getting more when in reality they hurt everyone else”
“Need more communication and honesty”
“Sometimes selflessness is the answer”
“If people weren’t greedy then we would at least be able to get one point extra credit”
“All it takes is one bad egg to ruin it for everyone”
“punish those who answered B”
“Communicate with others to achieve extra credit”
“Put people who choose B in jail”
“freshmen think that 1 point if extra credit is actually going to influence their grade”
“do your work maybe you wouldn’t need to pick B”
Resolving the Prisoner’s Dilemma requires careful structuring of the way people interact and enforcement of the formal rules and informal norms we develop to promote cooperation. It also requires that people exercise self-restraint in the pursuit of their self-interest, since no rules or monitoring mechanisms are perfect. We wouldn’t (or shouldn’t) want to live in a society where such rules are perfectly enforceable. How to do this so as to protrct one’s freedom to choose makes for a fun discussion in class.
In the end I gave everyone in the class who chose option A in the last round of the game (in which 3 points were possible) the 3 points extra credit. I don’t know if the class learned much, but I hope they left feeling better about their teacher.