A classic example of this is the prisoner's dilemma. In the prisoners dilemma, you have two criminals who've been arrested for a murder. The two criminals (now prisoners) are the agents. The police know that they did it; but they don't have enough evidence to convict them of murder, only of a lesser charge. So the police want to get the prisoners to rat on each other. You end up with the following situation:
1. If neither prisoner rats on the other, they'll both get off with a very light sentence of 6 months in jail.
2. If one prisoners rats on the other, that prisoner goes free, and the other one gets a life sentence.
3. If both prisoners rat on each other, they each get 10 years in jail.
Friday, 28 March 2008
A very clear explanation of Game Theory from Good Math, Bad Math.