In the context of Prisoner’s dilemma, which one of the following is correct ?
rational choices can lead to bad outcomes
The prisoner's dilemma is a classic game in which two players, each acting in their own rational self-interest, reach an outcome that is worse for both than if they had cooperated.
Because each prisoner's dominant strategy is to defect (confess), both defect and receive a worse result than the cooperative outcome they could have achieved. This shows that individually rational choices can lead to a collectively bad outcome.
It does not show that rational choices lead to good outcomes, nor that cooperation leads to sub-optimal results - in fact cooperation would have given the better result. The lesson is precisely the tension between individual rationality and collective welfare.
Hence it demonstrates that rational choices can lead to bad outcomes.
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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
