Favorite Economic Game!

My favorite economic game hands down is the prisoner's dilemma because it shows how two people might ultimately choose not to cooperate despite the benefits of working together. This is of course because saving oneself is the easier route to take as well as the safer one. (If the other individual does not cooperate, then the individual will be screwed.)

The cool thing about the prisoner's dilemma is that it can model real-life situations.

Take for example the Cold War, in which NATO and the opposing Warsaw Pact had nuclear weapons aimed at each other. The two opposing alliances had the choice of disarming. The ideal is for both to disarm, but the fear was that the opposing side would be armed while one was disarmed, in which case the opposing side was likely to fire away. So even though it was ideal for both sides to be disarmed (peace is of course the universal goal), it was much more rational to be armed than not to be, which was exactly what happened for the thirty years of the Cold War.

The prisoner's dilemma thus shows how what one interprets as another individual's decision will affect one's own decision--how decision-making can in fact be affected socially. Cool, don't you think?



-Alice