Prisoner’s Dilemma (PDSE)

Prisoner’s Dilemma

Students learn about the principles of game theory by making investment decisions

The prisoner’s dilemma is the canonical game used to teach game theory. It shows why individuals might not cooperate despite their best interest. In a single round game, the logical decision leads to betrayal, even though the individual benefit would be greater through cooperation.

In our version of Prisoner’s Dilemma, students play with two other counterparts in a game of multiple rounds. In each of the rounds, each player independently makes a decision about whether or not to invest funds to avoid a financial loss from a random negative event. After each round, players may receive feedback on what each player did.

During the game, negative events may occur that generate losses for each player. These can be direct or indirect, either a result of a player’s actions or that of his counterparts. Investment only makes someone immune to direct loss.

There are additional features which instructors may activate to make the decisions more interesting. Contact us to learn more about the game.