Prisoner's Dilemma, Winning and Losing Game

Creating trust in Prisoner's Dilemmas

1) Enhance transparency to enhance trust! Have the opportunity to talk and discuss to enhance trust. THIS IS THE KEY WAY TO MAKE TRUST, HELP ALL WIN. Show cards. 2) Identify situations where interests may conflict and discuss them with other stakeholders. When you have the opportunity to talk, it is better for you. 3) attempt when possible to structure decision making to align incentives. Incentives for cooperation and trust. Punishment for defecting. Public Shame 4) Tit-for-Tat, sacrificing play during the first round or so. -once burned, initially, you will never reach the optimal standard of trust you could have reached. -working with a group, team production. No incentive to shirk. When a lot of winnings come from the group rather than individual play. For the cooperation, not the individual. It requires unflinching commitment.

Business Judgement Rule

Allows managers to say that even if their actions were stupid, they didn't mean to harm shareholders with actions. It's all very locked up tight. The shareholders has virtually no power. The board is very insulated from shareholders. This is not what Milton Friedman should want, but Blair-Stout think that it's a good thing. Even with 2.2% share of a large corporation, one can own billions of a company, still can only nominate board members. It doesn't mean that the board members will win. They usually nominate from inside, the CEO usually nominates. It is very insulated.

Prisoner's Dilemma

Unless you count on corporation of other player or players, the incentive is to throw the game, to throw the other person under the bus. This lays at the genesis of the game. The only winning strategy is to cooperate every time.

Prisoner's Dilemma, mistrust

everyone ends up losing if there is mistrust. It is a canonical example of a game analyzed in game theory. It shows why two individuals might not cooperate even if it appears that it is in their best interests to do so. Two members of a criminal gang are arrested and imprisoned. Each prisoner is in solitary confinement with no means of speaking to or exchanging messages with the other. The police admit that they don't have enough evidence to convict the pair on the principal of the charge. They plan to sentence both to a year in prison on a lesser charge. They plan to sentence both to a year in prison on a lesser charge. The police offer each prisoner a Faustian bargain. If he testifies against his partner he will go free and his partner gets three years on the main charge. But there is a catch, if both prisoner's testify against one other, both will be sentenced to two years in jail.