Question

Prisoner's dilemma games imply that cooperative behavior between two people or two firms always breaks down. But reality teaches us that people and firms often cooperate successfully to achieve their goals. Why do the results from prisoner's dilemma games fail to predict real-world results

Answer 1

Answer: The prisoner's dilemma fails to consider the repetitive nature of real life situations where business relationships are not one-off.

Explanation:

The prisoner's dilemma game is a one-off situation in which two people who should be working towards achieving the same goal choose instead to forego co-operation and serve their individual interests.

However, business relationships in real world situations are built with trust and over time. In these situations individuals know that selfishness will be punished or rewarded by the people affected by your actions or decisions in subsequent interactions.