ABSTRACT
Ethics itself has evolved as a framework solution to problems arising at the intersection between the individual and the social. Among other branches of economics, game theoretical studies of enforcement mechanisms are quite good at exposing these problems. The Prisoner’s Dilemma is the most well known example of game theory. It formally tells the story of two prisoners whom the police cannot convict of a major crime based only on evidence. They are arrested, kept apart, and separately offered to cut a deal with the police in exchange for a light sentence. But there’s a catch; a prisoner who is betrayed by the other (having not confessed himself) will bear the full brunt of the law, while the other goes free. Strategically, betrayal is very attractive because the collaborator will, at worse, receive a medium sentence in jail, and, at best, can hope to cooperate with the other prisoner to receive a light sentence. The optimal outcome that is best for both is not to collaborate with the police and thus both face a relatively light sentence (the police can convict them for a lesser crime). The story is laid out formally in Table 4.
