Application of Prisoner's Dilemma in Business

Prisoner’s Dilemma game is one of the earliest game theory aimed at behavior analyzing of two individuals when they are making choices that partly give the control over occurred situation. The long history of experimental researches on the prisoner’s dilemma game revealed that during repeated game participants were more cooperative than in one-shot game. Moreover, the prisoner’s dilemma structure covers such important aspect as ethical choice. Usually participants can realize the importance of ethics in decision making after they can see the results of both ethical and unethical conduct. Implementation of such activities provides an effective method of teaching ethics because individual actions could be described within the scenarios. There are lots of examples of using Prisoner’s Dilemma game in real life, especially in such spheres of studies as Biology, Economics, Sport, Politics and Business. In economics Prisoner’s Dilemma is used to understand advertisement. In business Prisoner’s Dilemma game could be used to understand companies’ behaviour in oligopolistic market when they make decisions in face of uncertainty about how their rivals will react to their moves.