Asked by Kaylee Craig on Jun 13, 2024
Verified
A Prisoners Dilemma illustrates the fact that
A) Rational choices can lead to inefficient outcomes
B) Rational choices always leads to good outcomes
C) Rational choices always lead to inefficient outcomes
D) None of the above
Prisoners Dilemma
A paradox in decision analysis in which two individuals acting in their own self-interest pursue a course of action that does not result in the ideal outcome for either party.
Rational Choices
Decision-making based on logical evaluation of outcomes and choosing the option that maximizes benefit or utility.
Inefficient Outcomes
Situations in which resources are not allocated optimally, leading to lost potential welfare or value.
- Examine the performance of different outcomes in game-theoretic situations.
Verified Answer
TL
TUYEN LE NGUYEN LANJun 13, 2024
Final Answer :
A
Explanation :
In a Prisoners Dilemma, both individuals choosing to betray each other is a dominant strategy but it results in both receiving a worse outcome than if they had both chosen to cooperate. This illustrates that rational choices can lead to inefficient outcomes. The best choice would be for both individuals to choose to cooperate, but this requires trusting the other person to also cooperate.
Learning Objectives
- Examine the performance of different outcomes in game-theoretic situations.