Thursday, August 8, 2013

Prisoner's Dilemma Example and the Coalition Game

A great example of the Prisoner's Dilemma via


Note Nick's insistence upon picking "Steal" right away, which put Ibraham in the position of taking a serious leap of faith. I was surprised by the ending.

I actually had a similar experience last night in my Negotiations class. We played "The Coalition Game," which went like so:

Three teams (A, B, and C) discuss how to split a pot of money. The pot of money can only be split between two teams (the coalition), leaving one team out. The pot of money to be split depends on which two teams form the coalition. The pot cannot be split evenly, and neither team can accept less than $0.01.

If Team A and Team B form a coalition, they split $20.

If Team A and Team C form a coalition, they split $16.

If Team B and Team C form a coalition, they split $12.

A coalition is formed only when two teams, after 9 rounds of one-on-one negotiations (order is below), agree on how to split the pot with one other team. After the final round of discussions, each team, individually and secretly, submits a slip of paper with their perceived agreement with another team. If none of the slips match, there is no coalition, and every one walks away with nothing.

Each team negotiates with one other team at a time, with the other team outside the room.

The order of negotiations is:

(repeated twice more)

I was on Team A. We started off by offering Team B $13, with us taking $7.

We ended up outside the coalition at the end. It was a good exercise in trust and simple human greed.

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