Thursday, April 23, 2009

Prisoner's Dilemma

Economics as a science has helped improve the lives of many people and I am thankful for this. But economics tends to overreach science into the realm of ethics. The economic principle of "rationality" is one example of this. Rationality is defined by economics as someone acting to maximize their own "utility". That is, to act in their own best interest. On a scientific level this is not true. There are many times when people do not act in their own best interest but for a greater good. Since people don't always act "rationally" economics then moves from the level of science (what is) to the level of ethnics (how people should act).

From a Catholic perspective rationality requires the theological virtues of "faith, hope and love" because without these virtues it is not possible to see reality. If your not reasoning from the perspective of faith, hope, and love then the reasoning will be faulty. According to Christ there are times when we should act counter to our own self interest.

I want to look at game theories scenario of the "prisoner's dilemma" to look out how economics theory reasons how people should act. Here is the scenario...

Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated both prisoners, visit each of them to offer the same deal. If one testifies (defects from the other) for the prosecution against the other and the other remains silent (cooperates with the other), the betrayer goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act? Wikipedia

There are a lot of assumptions to the argument which I will not quote to make the reasoning valid (you can go read them yourself) but here is the economic conclusion...

In the classic form of this game, cooperating is strictly dominated by defecting, so that the only possible equilibrium for the game is for all players to defect. No matter what the other player does, one player will always gain a greater payoff by playing defect. Since in any situation playing defect is more beneficial than cooperating, all rational players will play defect, all things being equal. Wikipedia

In game theory you never pick a strictly dominated position. So in the case of both suspects being innocent, according to the game theory logic, you should still make up a story about the other prisoner so you don't get 10 years. The scary thing about this is that our legal system is actually set up to make this scenario with plea deals. The problem is that the question, "What is the right thing to do?" is not considered because it stands outside the bounds of economic, "rationality".

The other issue that I have is that by fitting real life situations into this model you lose perspective on unknown risks. For example, You could be haunted with guilt for ten years or after 10 years of plotting the betrayed prisoner will get out of prison and execute his revenge. Those "unintended consequences" are bound to turn up when you oversimplify a situation and fit it into an artificial economic model.

From the Christian perspective I think the following is true, "Blessed are those who pick a strictly dominated strategy for a greater good."

It is important to understand the economic principle taught by the prisoners dilemma. Lawyers, economist, and politicians are probably going to go with a dominate strategy and we should factor this in when making our decisions of what is the right thing to do. If not you may be faced with the Charley Brown Dilemma....

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