What the Prisoner's Dilemma Teaches Us About Human Behavior (2024)

Have you ever been in a position where someone's decision will impact you and vice versa? How do you make the decision? How much do you think of yourself over the other person? This is the Prisoner’s Dilemma in action.

A concept in psychology and game theory, the Prisoner’s Dilemma, in its most basic form, “explains two people’s choices in trading off their self-interest with their collective welfare. It explains the thinking behind each option and their consequences,” says Michael Taylor, the co-founder and CEO ofSchellingPoint in West Chester, Pennsylvania.

The Prisoner’s Dilemma is relevant to diverse areas including psychology, economics, politics, biology, investing, or anywhere where decisions based on cooperation and selfish interest clash.

Understanding the Prisoner's Dilemma

The idea of the Prisoner’s Dilemma was developed in 1950 by mathematicians Merrill Flood and Melvin Dresher for the Rand Corporation’s investigations in game theory. They were interested in modeling Cold War strategies.

“For example,” explains Taylor, “the US and Russia needed to decide to reduce or increase their volume of nuclear weapons without being able to talk directly.” A bit later, Albert W. Tucker came up with the title “prisoner’s dilemma” and the version with prison sentences as payoffs to make Flood and Dresher’s ideas more understandable to Stanford psychologists.

In this version, Prisoner A and Prisoner B are both charged with a crime and interrogated separately. Each is given a choice between betraying the other or staying quiet. Neither knows what the other will do, but the outcome depends on their combined choices. There are three possible outcomes:

The best outcome for both prisoners, says Taylor, is to cooperate, but the rational choice, in the sense that each of them will try to minimize their own punishment, is for each of them to betray the other and defect. This demonstrates the conflict between selfish interest and cooperation, and why the prisoners may fail to achieve the best collective outcome.

“The insight gained from this dilemma helps in analyzing situations where trust and collaboration are relevant but difficult to achieve,” says Niloufar Esmaeilpour, a Registered Clinical Counsellor, Approved Supervisor, and Founder of Lotus Therapy & Counselling Centre in British Columbia, Canada.

Examples of the Prisoner's Dilemma

Taylor provides the following scenario as an example of the Prisoner’s Dilemma: “Two parents living on a tight budget agree to control their spending…. They can choose to cooperate, hoping the other will do so, too, or ignore the agreement so they don’t suffer having little money to spend. This is the easy choice if they have little trust in the other person. Why reduce their spending if they don’t think their partner will abide by their agreement? If they continue spending and their partner does, too, they are justified in not acting on the agreement. If they continue spending and the other doesn’t, even better, they don’t have to reduce their spending, but their joint problem improves.”

For instance, Esmaeilpour points to real-life examples such as “the arms race between countries where mutual disarmament will benefit both, but mistrust compels them to arm."

"Another example," he says, "is business competition, whereby firms underbid to share the market, which hurts both firms in the long term. Environmental problems such as overfishing mirror this dilemma where [short-term] individual gain leads to [long-term] collective harm.”

This is the trouble with many real-world examples of the Prisoner’s Dilemma. As Taylor says, “the self-interested gain is short-term and tangible, but the collective gain is long-term and intangible.”

He cites problems like deforestation, vaccination, and culture change to make his point. For example, while the people who cut down acres of forest will see a benefit now, in the long term, we all suffer because there is less oxygen in the air and shade on our planet, though that’s harder to see.

Extensions and Variations of the Prisoner's Dilemma

We’ve talked mostly about a single-round game of the Prisoner’s Dilemma, but there can be games of multiple rounds too. A game where two players take more than one turn in succession is called an iterated Prisoner’s Dilemma.

In addition, there can be multiple players as well as multiple rounds. According to Esmaeilpour, these versions of the game “can model complex social interactions.” And Taylor gives real-life examples. "Family members, leadership teams, joint ventures, countries. These are known as… repeated games, and communication can occur, even if not directly, by sending each other signals through words and actions intended to be interpreted a certain way."

Strategies and Outcomes in the Prisoner's Dilemma

There are many strategies for playing the Prisoner’s Dilemma, including always defecting or always cooperating. However, one of the best strategies for a Prisoner’s Dilemma game with iterated rounds is called tit-for-tat. There are just two instructions for this strategy: in the first match, cooperate; in every match after that, do what the opponent did in the previous match.

The reason for tit-for-tat’s success appears to be that it’s nice, but it’s not so nice that the strategy is a pushover. If tit-for-tat is betrayed, it betrays back, but it’s ready to forgive if its opponent cooperates in the next round.

In practice, says Taylor, tit-for-tat can be used to organize groups “to cooperate for the collective good over personal gain. The group identifies a shared topic requiring coordinated action toward a goal that benefits them all. They ensure that each team member's first action is cooperative, supporting that shared goal. Subsequently, in future decisions on the topic, the cooperators choose to cooperate, or [they] defect if one or more members defected previously. Over time, this teaches that defection will be… acknowledge[ed] and punish[ed] with defection, and that a return to cooperation will be rewarded.”

Criticisms and Limitations of the Prisoner's Dilemma

There are several criticisms and limitations of the Prisoner’s Dilemma. For instance, Esmaeilpour says that the Prisoner’s Dilemma “simplifies the complexity of human behavior when most decisions in the real world are not reduced to simple, binary choices. Moreover, the dilemma does not consider long-term relationships where issues of trust and reputation play very important roles.”

However, in the real world, where trust and reputation are often automatically assessed, the Prisoner’s Dilemma could reveal their influence on strategic decisions.

Wrapping Up

The Prisoner’s Dilemma has been used to study human cooperation for decades. In the original dilemma, one prisoner is rewarded if only they act in their own self-interest, but the best solution for both of them is to cooperate. Your solution for the Prisoner’s Dilemma says a lot about how you see yourself and others.