The Game Theory of Conflict
The Prisoners' Dilemma: An Unsympathetic Critique
The most popular, most famous, most mentioned exemplar in game theory, especially in the social sciences, is the 'prisoners' dilemma' - actually a predicament rather than a dilemma. Two men - all we know is their gender - charged with a joint violation of the law, are held separately by the police. Each is told that:
If one confesses and the other does not, the former will be given a reward of one unit and the latter will be fined two units;
If both confess, each will be fined one unit;
If neither confesses, both will go clear.
Each of the two gains suffered less by confessing, but if they could reach a binding agreement they would clearly agree not to confess.
As originally presented in unpublished note by Albert Tucker and, usually, faithfully followed by game-theoretic analysts, this is all we know, namely their gender.
It usually follows, at least by implication, that both confess, contrary to their joint interest.
I am going to argue that we cannot conclude that the two are likely to confess. My argument will be simply, namely, that we don't know what they know and cannot predict what they will decide.
Thomas C. Schelling, PhD Harvard economics, 1951, was on the Faculty of Yale University 1953-57, spent 1958-59 at the RAND Corporation, 1959-90 at Harvard, Department of Economics, Centre for International Affairs, and John F. Kennedy School of Government, and 1990-2005 at the University of Maryland's Department of Economics and School of Public Policy.
He was a fiscal analyst at the US Bureau of the Budget, 1945-46, did graduate work at Harvard, 1946-48, was in the Marshall Plan Mission to Denmark 1948-49, the European Office of the Marshall Plan, Paris, 1949-50, the White House Foreign Policy Staff, 1950-51, and the Executive Office of the President (foreign aid programs), 1951-53.
His main theoretical interests have been bargaining, conflict and cooperation, racial segregation and techniques of self-management. His main policy interests have been nuclear weapons, the limitation of war, climate change, foreign aid and tobacco. From 1983-1989 he was founding director of the Institute for the Study of Smoking Behaviour and Policy at Harvard University.
His major books are The Strategy of Conflict, 1960, Strategy and Arms Control (with Morton H, Halperin) 1961, Arms and Influence 1966, Micromotives and Macrobehaviour 1978, Choice and Consequence 1984, and Strategies of Commitment and Other Essays 2006.
He has been elected to the National Academy of Sciences, the National Academy of Medicine, and the American Academy of Arts and Sciences, and is the recipient of the Frank E. Seidman Distinguished Award in Political Economy and the National Academy of Sciences Award for Behavioural Research Relevant to the Prevention of Nuclear War.
In 2005 he received, jointly with Robert Aumann, the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel.
Thomas Schelling lives with his wife, Alice Coleman Schelling, in Bethesda Maryland.