In the classic presentation of the Prisoner's Dilemma, you and your fellow bank robber have been arrested and imprisoned. You cannot communicate with each other. You are facing a prison sentence of one year each. Both of you have been offered a chance to betray the other (Defect); someone who Defects gets one year off their own prison sentence, but adds two years onto the other person's prison sentence. Alternatively, you can Cooperate with the other prisoner by remaining silent.
So:
Or in the form of an outcome matrix where (o1,o2) is the outcome for Player 1 and Player 2 respectively:
Player 2 Defects: Player 2 Cooperates: Player 1 Defects: (2 years, 2 years) (0 years, 3 years) Player 1 Cooperates: (3 years, 0 years) (1 year, 1 year)
As usual, we assume:
(For scenarios that would reproduce the resulting ideal structure with more realistic human motives and situations, see True_prisoners_dilemma.)
Then we can rewrite the Prisoner's Dilemma as a game with moves D and C, and positive payoffs where $X denotes "X utility":
D2C2D1($1,$1)($3,$0)C1($0,$3)($2,$2)
In the Prisoner's Dilemma, each player is individually better off Defecting, regardless of what the other player does. However, both players prefer the outcome of mutual Cooperation to the outcome from mutual Defection; that is, the game's only Nash equilibrium is not Pareto optimal. The Prisoner's Dilemma is therefore an archetypal example of a coordination problem.
The Prisoner's Dilemma provoked an enormous amount of debate, mainly due to the tension between those who accepted that it was reasonable or 'rational' to Defect in the Prisoner's Dilemma, and those who found it hard to believe that two reasonable or 'rational' agents would have no choice except to helplessly Defect against each other.
The Iterated Prisoner's Dilemma (IPD) was another important development in the debate--instead of two agents playing the Prisoner's Dilemma once, we can suppose that they play the PD against each other 100 times in a row. Another development was 'tournaments', run on a computer, in which many programmed strategies play the Prisoner's Dilemma against every other program. Combined, these yield an IPD tournament, and almost every IPD tournament--whatever the variations--has been won by some variant or another of...