Prisoner's dilemma

The prisoner's dilemma is a game theory thought experiment involving two rational agents, each of whom can either cooperate for mutual benefit or betray their partner ("defect") for individual gain. The dilemma arises from the fact that while defecting is rational for each agent, cooperation yields a higher payoff for each. The puzzle was designed by Merrill Flood and Melvin Dresher in 1950 during their work at the RAND Corporation.^[1] They invited economist Armen Alchian and mathematician John Williams to play a hundred rounds of the game, observing that Alchian and Williams often chose to cooperate. When asked about the results, John Nash remarked that rational behavior in the iterated version of the game can differ from that in a single-round version. This insight anticipated a key result in game theory: cooperation can emerge in repeated interactions, even in situations where it is not rational in a one-off interaction.

Albert W. Tucker later named the game the "prisoner's dilemma" by framing the rewards in terms of prison sentences.^[2] The prisoner's dilemma models many real-world situations involving strategic behavior. In casual usage, the label "prisoner's dilemma" is applied to any situation in which two entities can gain important benefits by cooperating or suffer by failing to do so, but find it difficult or expensive to coordinate their choices.