Chapter 6 Prisoners Dilemma Summary and Analysis

One of von Neumann's colleagues at RAND during the 50s was Merrill Flood. At the time, many researchers would come to RAND during the summer and then leave when school started. Flood starting watching what would people would sell when they left California and noticed that they seemed to often behave irrationally. He noticed that in division games or bargaining situations where neither party has any bargaining power over the other, say where two people are deciding how to divide a bonus check, each party can veto the other and hence any point can be a potential Nash equilibrium. People did seem to, especially when they knew each other, settle on mostly fair divisions in problems like this. This is a case of the desire for cooperation overriding the game-theoretic notions of rationality. Another game that Flood...