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The prisoner's dilemma is a situation used in game theory to show how people who are in competition with one another can make decisions that seem rational but which end up hurting them in the end. It is used to illustrate ideas in philosophy, in business, in international relations, and in other fields.
The prisoner's dilemma game is set up so that two people must make a choice without knowing what the other will do. They must choose to cooperate or "defect" (not cooperate). Depending on what combination of choices the two make, they each get a set reward or punishment. (Follow the link for details.)
The basic idea is that if they both cooperate, they get a relatively good result. If they both defect, they both get a very bad result. But if person A cooperates and person B defects, person A gets the worst possible result and person B gets the best possible result.
So each person has to try to decide what to do -- trust the other person, or not.
Prisoners dilemma is a business game or exercise which is designed to emphasize the superiority of collaboration and cooperation over competition and conflict. The original game features to players or groups taking decision in the role of two prisoners who are put in an adversarial situation, so that the result of decision taken by any one is also affected by the decision of the other. The decision taken by each is not known to the other and the result of combination of decision affects both of them, which may or may not be in the same way.
The situation presented in the case is that two persons A and B have been imprisoned for an alleged crime. Each prisoner is asked choose to agree or refuse to testify against the other. The choices made by the two players present four different combinations. These are:
Testifies Does not Testify
Does not Testify Testifies
Does not Testify Does not Testify
for each of the above combination of option chosen by players they receive payoff in terms of jail terms of varying duration. These pay offs are fixed so that the combined result for both the players is most attractive when both choose not to testify against the other. It is least attractive when both choose to testify each other. When only one person chooses to testify, that player gets rewarded for it while the other one gets punished.
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