Prisoner’s Dilemma or Stag Hunt?
While the rational self-interested play in a Prisoner's Dilemma might always be to betray your partner, business ethics in the real world are an altogether different game.
Yesterday, Nick introduced us to a classic problem of game theory: the Prisoner's Dilemma. A standard PD goes something like this:
Two suspects are arrested by the police, who, having insufficient evidence for a conviction, separate the prisoners and offer each of them a deal: If one testifies against the other (who remains silent) the first goes free while the second receives a 10-year sentence. If both refuse to testify, both receive a six month sentence. If each betrays the other, each receives a five-year sentence. No prisoner can know what choice the other has made before the end of the investigation.
The Prisoner's Dilemma, he noted, often provides grist for the dominant argument here in late capitalism that any rational player in an economic game should act unethically. This is because, in the form of a single PD game, a self-interested player (who wants the least possible amount of jail time) will always do better for himself by ratting out his partner.
For example, let's say you are Prisoner A, and your accomplice Prisoner B can make the following choices: stay silent or betray you. Assume B is silent: If you also stay silent, you get a 6-month sentence; if you betray your pal you get no jail time at all. A self-interested agent, here, should betray. Now assume B betrays you: If you stay silent, you get a ten year sentence, and if you betray him, you get a five year sentence. Again, you should betray. Betraying is thus what game theoreticians call a strictly dominant strategy.
So far so bad, clearly, for the advocate of adopting an ethical stance in business. However, the picture is not so clear in the real world. Why? Well, for one thing, the world of business does not involve a single isolated economic exchange. If it is a prisoner's dilemma at all, it is a continuously iterated one, for which it is not clear at all that such a strategy is optimal.
| Tagged with: | David Hume, Design Ethics, Ethics, Game Theory, Prisoners' Dilemma, Stag Hunt |




