In the context of Prisoner's dilemma, which one of the following is correct?
rational choices can lead to bad outcomes
Option 1 — rational choices can lead to bad outcomes is correct.
The Prisoner's dilemma is a classic game-theory situation involving two players who each act in their own self-interest. Each prisoner is offered a lighter sentence for confessing (defecting). Whatever the other does, confessing looks individually better, so the dominant strategy for both is to confess.
The paradox is that when both follow this individually rational strategy, they both end up worse off than if they had both stayed silent (cooperated). In other words, self-interested rational decision-making drives the pair to a jointly inferior, non-cooperative equilibrium — a Nash equilibrium that is not Pareto-optimal.
Why the other options are wrong: (2) is the opposite of the dilemma's lesson. (3) is reversed — here it is non-cooperation (defection) that yields the sub-optimal result, while cooperation would improve both players' payoffs. (4) is ruled out because option 1 is valid.
Takeaway: The Prisoner's dilemma shows that individually rational choices can produce a collectively bad outcome, motivating cooperation and binding agreements.
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Important Questions from Decision Making
- Who pioneered the concept of "Fight or Flight situation" as stress survival trait ?
- An economic decision in the family deals with :
(i) Multiple goals
(ii) Single goal
(iii) Multiple values
(iv) Scarce resources
code : - Match List – I with List – II and indicate your answer by using the codes given below :
List - I
(Concept)List - II
(Description)p. Heuristics 1. Judgements made on the basis of specific kind of information that can be brought to mind. q. Representative Heuristics 2. Tendency to use a number of value as a starting point to whom one adopts. r. Availability Heuristics 3. Simple rules for drawing inferences in a rapid and effortless manner. s. Anchoring and Adjustment Heuristics 4. Judgements made on the basis of resemblance of current stimuli to other stimuli.
Codes: - Arrange in correct sequence the steps involved in decision-making :
I. Selecting the best alternative
II. Identifying the problem
III. Searching alternative solutions
IV. Thinking through alternatives
V. Feedback - Arrange in proper sequence the steps involved in problem solving stage :
(a) Obtaining relevant information
(b) Selecting the best course
(c) Formulating possible course of action
(d) Identifying the problem
