From the first video on the prisoner’s dilemma and the term Strategic Interaction means the decisions you make effect others and how your effected by others actions. Similar to the group experiences we had, one member could break the entire group or the entire group has to work towards a mutual beneficial goal. The use of the chart is to measure the possible best out come for each player. Note: we’ve considered in the example that there are only two parties. In this case, the chart that we’re given can only be related two parties or sides and not multiples.
Player 2 [Confess No] [Confess Yes]
Player 1 [Confess No] [10, 10] [O,15]
Player 2 [Confess Yes] [15, 0] [5,5]
This example of the prisoners confess is based on the psychology that both want the best (i.e. a Dominant Strategy). The best bet individually would just to confess and try and go for 15 points, however, if both will confess they will both get 5 (i.e. Nash Equilibrium). However, if both parties could trust each other, both could leave with 10. In this case, this is where negotiation and contracts help to create mutual benefit. Thus, corporations more than likely have insensitive to cooperate with their competitors even though it’s illegal, because cooperation leads to better wins. The assumption of the presenter is that cooperation act more individually and that cooperation is based on guessing what the competition is going to do.
(http://www.youtube.com/watch?v=uAcVrcrqhn8&feature=relate)
An example where the third video game theory and Banta work hand and hand in the negotiation for Mike’s pay raised because his boss is slowly pushed in to a BATNA. Since the boss doesn’t want to lose him, it corners his boss.
(http://www.youtube.com/watch?v=ikE1pn034WA&feature=related)
@ Braing and @ Tiffany
“Regarding the tobacco companies, don't forget they both benefitted by the ban on advertising. It (the ban) was a gift to them in some ways, saving them millions of dollars in advertising because they had to compete.”
I fully agree, but let’s look at the chart
Let C= Comapny
[C1 Advertise Yes] [C1 Advertise No]
[C2 Advertise Yes]
[C2 Advertise No] [15,15]
In this case, it stands to show although it is illegal for companies to cooperate in full “inclusion”, the benefits of having legal agreements that hold each other to do certain set of action still stand. If you remember the movie “Thank You for Smoking”, it cited an interesting case related to Philip Morris. That being that one of the major cigarettes cooperation actually funded the anti-smoking campaigns. Now if we consider that this model only does a comparative analysis of two parties in decision matrix, then it also shift focus from a third outside force can manipulate an entire industry as in this case. Case in point, the analogy of the “prisoners” does not tell us how crooked the cops are and only creates a BANTA for the prisoners when dealing with the outside force of law.
Considering Michael Moore’s recent documentary “Capitalism a Love Story”, the event that lead us to the “2008 Crisis”, and the “Great Depression” game theory has a huge hole in logic, it doesn’t account for an outside force. In our lives we will face many outside forces, and seems game theory means to team up in order to get the best out come when dealing with these outside forces. In as sense, the outside force could be analogues to a mediator who has an self interest (i.e. a lustful marriage councilor after one of the spouses they are trying to help). LOL, sounds more like a Life Time Movie then a Conspiracy Theory, heh.
