Altruistic Preferences in the Prisoners' Dilemma
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4 Terms
Why can the problem of free riding be relevant here?
-An explanation for the unfortunate outcome that came about - they didn’t factor in the cost that their actions inflicted on the other party
-The fact that their dominant strategy was to use Terminator rests on the huge payoff they gain if the other uses IPC
Why can altruistic preferences lead to a different outcome occurring?
-When Anil is completely selfish, he does not care about Bala and thus, what the costs of using the Terminator will do. Anil gains no utility from bearing any cost to help Bala out
-But if Anil does care for Bala, her indifference curve slopes, thus meaning utility is derived from helping out Bala. Therefore, Anil may be included to pick IPC, regardless of what Bala picks
-If both are altruistic, then they may end up at the best outcome possible in this game.
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