Prisoner’s Dilemma

Ok, so lets imagine that the authorities were able to capture one of the criminals who was involved in some minor crimes that are not related to the jewelry store robbery. These small crimes have a penalty of one year in prison for this criminal. The authorities in this case have the hope of being able to use this one-year penalty in prison in order to get one of the jewelry robbers or both of them to imply the other partner in crime in exchange for exemption.

As you can probably imagine, when both criminals decided to participate in the crime of robbing a jewelry store, they both swore they would never rat each other out, however, what would actually happen when it comes down to it?

The police would follow along with the procedures and would separate both criminals and interrogate them in separate rooms. The police would offer each one of them the possibility of testifying against the other in exchange for freedom.

The problem that both criminals have now is that what occurs does not only depend on what each one individually does, but also on what their partner decides to do. Remember that each one of them is allowed to exchange a confession for freedom, but they will only be able to get that freedom if their partner does not fess up at the same time in the other interrogation room.

In this type of case there are a few things that could occur:

• If both of the criminals decide to stick to the agreement they made together and neither of them confesses to the robbery, each one or one (depending on the case) would only get condemned for one year for minor misdemeanors.
• Lets say that one of the criminals decides to confess and agrees with giving evidence against the other while the other decides to stay quiet. This would mean that the first one would get out free because he decided to cooperate with the police, whereas the second one will be condemned to around ten years in prison for robbing.

The same could occur the other way around.

If both of the robbers decide to confess and admit to the crime, they would both end up going to jail for half the time they would have originally (five years instead of ten). However, why would they only get half of the sentence? In the cases in which both confess to a robbery the police would no longer need to offer them such a generous offer and they will not need to give them freedom so they testify against the other. On the other hand the police will want to give each of these men an incentive to confess, so the police will only send the men to jail for half of the time that was originally established, instead of twice that amount the person who decided to stay quite would get while the other ratted out on him.

Prisoner’s Dilemma is something very famous because it illustrates that according to the way the police established the potential retributions, each criminal has an incentive to confess, no matter what the other criminal does.

Obviously what the police would want in a situation like this is for both criminals to confess separately so each one can go to prison for five years or so and this is the reason they separate the prisoners and establish the retributions in the way they do.

Remember that both prisoners had previously agreed on not speaking with the police, but the fact that the retributions are structured in such a way that confessing would be the dominating strategy puts both of them in a tight situation. Each man maintains their promise and is risking many years in prison if the other decides to confess or breaks the promise in an effort to reduce the amount of time they would get in jail. Due to this difficult decision is the reason it is called Prisoner’s Dilemma.

Generally, both criminals choose a dominating strategy and confess. But since both decide to confess separately, each one would receive half the conviction time in prison, which in reality is worse then if both had kept their promise of keeping silent. If each one of them had kept their promise they would each only end up going to jail for one year for smaller crimes. The logic of the dominating strategy is so rewarding however that in many cases both break the agreement they made between each other and end up going to prison for a much longer time.

Just as we mentioned before, the members in a cartel also face Prisoner’s Dilemma because they need to decide if they should go along with the cartel’s agreement or if to cheat and produce more then what had originally been agreed on. So in this way, the temptation for the members of the cartel to produce above the quota is just as strong as it is for prisoners to confess and break the agreement about not talking to the authorities.