How We Frame Negotiations Matters

This is a follow up to a primer for the Prisoner's Dilemma that questions its application in real world scenarios and raises some potentially negative implications. I invite feedback and criticisms.

We’ve considered how the Prisoner’s Dilemma reveals a number of key concepts in Game Theory. Yet, I have some reservations that it is the field’s best advocate for applying Game Theory in the real world. I first expressed this concern on a Reddit thread—receiving helpful feedback which has informed this series of posts.

Game Theory aims to enhance cooperation, and yet the first scenario we’re presented with is a peculiar situation where the Nash Equilibrium is mutual defection. This is due to the fact that it’s a one-shot negotiation, in the dark, with no communication, trust or loyalty, no future consequences and no external factors, being decided by two “rational” (purely self-interested) criminals!

Is this an ideal starting point for fruitful negotiations?

Well, as Kaomet points out…

… there is more drama to it than just a win-win situation

So, it’s provocative, but the potential lesson from such an introduction—rationality equals defensive selfishness, while cooperation is irrational and futile—seems at odds with healthy social norms and moral intuitions. Then again, it can be argued that the fact that the Prisoner’s Dilemma conflicts with pro-social behaviour, makes it a good “dilemma”.

As commented by Forgot_the_Jacobian

The one shot Prisoners Dilemma is often used in Econ teaching… since it is a paradigmatic example of how individuals acting in their own self interest can lead to a situation that is not socially optimal.

… and as MarioVX clarifies

If you claimed this is possible without an example, most people wouldn’t believe you… it’s an excellent hook to get people into game theory

So, it is a good example of how dilemmas arise. But there is a fine line between explaining and excusing behaviour. By framing a situation in such self-serving terms and calling it “rational”, do we run the risk of justifying selfish behaviour? Well, not if you think about it in a nuanced way and see the paradoxical nature of the dilemma and the conflict with our moral intuitions!

To understand why the Prisoner’s Dilemma is at odds with our moral intuitions, we’ll explore some key points of difference between game theory and reality.

Constraints: Reality d

...

Game Theory's Poster-Child & Friends