| Example,
generalization, and interpretations |
| Prisoner 2 |
| Defect |
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| Interpretation
of payoffs: |
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| 2 = Temptation |
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| 1 = Reward |
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| 0 = Punishment |
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| -1 = Sucker |
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| Condition:
T > R > P > S |
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| (1, 1) |
| (-1, 2) |
| (b-c,
b-c) |
| (-c,
b) |
| (2, -1) |
| (0,
0) |
| (b,
-c) |
| ( 0,
0) |
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| b
- c = 1 = net benefits from |
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| cooperation |
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| c
= 1 = cost of cooperation |
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| b
= 2 = benefit from other |
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| (sucker’s)
cooperation |
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| 0
= benefits from no action |
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| Condition:
b > c > 0 |
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| (1’s payoff,
2’s payoff) |
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| The
dominant strategy is for both players to |
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| defect, so
individually rational behavior |
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| produces
a socially suboptimal outcome. |
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