Premium Essay

Economics

In: Business and Management

Submitted By beha
Words 1767
Pages 8
K.B
B.U 24.02.2014

1) Briefly discuss the similarities between real world situations and the concepts of prisoners’ dilemma, battle of sexes, matching pennies and hawk-dove games.

Prisoners' dilemma

Example 1
Barbers shop and Hairdressing are located in the same area. Each barber wants to have more clients. Each Decided to discount. Barbers shop made a discount 20% because he thought that Hairdressing will make 10% discount, and Hairdressing also made a discount because he also thought that Barbers shop will make 10% discount. Each barber's dominant strategy is 20%, which gives an inferior outcome if both use their dominant strategy. Barber's situation is similar to prisoner's dilemma because in this game if each player uses its dominant strategy it gives an inferior outcome. Of course they can cooperate and choose the best option for both of them.

Example 2
Warsaw University and Politechnick University are two famous universities in Poland. Both universities want to have more international students. Each decided to discount for international students. Warsaw University made a discount 30% because he thought that Politechnick University will make a 20% discount, and here Politechnik University also made a discount because he also thought that Warsaw University will make 20% discount. Each university’s dominant strategy is 30%. Universities situation is similar to prisoner's dilemma because in this game if each player use its dominant strategy it gives an inferior outcome. Of course they can cooperate and choose the best option for both of them.

Battle of sexes

Example 1
Badakhshon is a valley inside of Republic of Tajikistan.

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