Prisoner’s Dilemma

Prisoner's dilemma is problem in a game theory. It was framed at RAND by Merill Flood and Melvin Dresher in 1950. Albert Tucker formalized the problem by adding the prisoner statements and giving name 'Prisoner's Dilemma'.
It touches various fields of science : evolution, game theory, cooperation, altruism, reciprocal altruism, moralism for some names.

The classic statement is :
'Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated both prisoners, visit each of them to offer the same deal. If one testifies (defects from the other) for the prosecution against the other and the other remains silent (cooperates with the other), the betrayer goes free and the silent accomplice receives the full 10-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?'

We have an iterated version of the dilemma known as 'Iterated Prisoner's Dilemma'
Solutions:
I will be posting different strategy for PD and about its occurrences in future  posts.

The Stanford University

A lady in a faded gingham dress and her husband,dressed in a homespun threadbare suit, stepped off the train in Boston, and walked timidly without an appointment into the president of Harvard's outer office. The secretary could tell in a moment that such backwoods, country hicks had no business at Harvard and probably didn't even deserve to be in Cambridge.
She frowned. "We want to see the president," the man said softly. "He'll be busy all day," the secretary snapped. "We'll wait," the lady replied. For hours, the secretary ignored them, hoping that the couple would finally become discouraged and go away.
They didn't. And the secretary grew frustrated and finally decided to disturb the president, even though it was a chore she always regretted to do. "Maybe if they just see you for a few minutes, they'll leave," she told him.
And he sighed in exasperation and nodded. Someone of his importance obviously didn't have the time to spend with them, but he detested gingham dresses and homespun suits cluttering up his outer office. The president, stern-faced with dignity, strutted toward the couple. The lady told him, "We had a son that attended Harvard for one year. He loved Harvard. He was happy here. But about a year ago, he was accidentally killed. And my husband and I would like to erect a memorial to him, somewhere on campus."
The president wasn't touched, he was shocked. "Madam," he said gruffly. "We can't put up a statue for every person who attended Harvard and died. If we did, this place would look like a cemetery". "Oh, no," the lady explained quickly. "We don't want to erect a statue.
We thought we would like to give a building to Harvard." The president rolled his eyes. He glanced at the gingham dress and homespun suit, then exclaimed, "A building! Do you have any earthly idea how much a building costs? We have over seven and a half million dollars in the physical plant at Harvard." For a moment the lady was silent. The president was pleased. He could get rid of them now. And the lady turned to her husband and said quietly, "Is that all it costs to start a University? Why don't we just start our own?" Her husband nodded. The president's face wilted in confusion and bewilderment. And Mr. and Mrs. Leland Stanford walked away, traveling to Palo Alto, California where they established the University that bears their name, a memorial to a son that Harvard no longer cared about.

The way of Unorthodox thinking

The following concerns a question in a physics degree exam at the
University of Copenhagen.

"Describe how
to determine the height of a skyscraper with a barometer."



One student replied:



"You tie a long piece of string to the neck of the barometer, then
lower the barometer from the roof of the skyscraper to the ground. The length of the
string plus the length of the barometer will equal the height of the building."


This highly
original answer so incensed the examiner that the student was failed. The student
appealed on the grounds that his answer was indisputably correct, and the university
appointed an independent arbiter to decide the case. The arbiter judged that the answer
was indeed correct, but did the problem it was decided to call the student in and allow
him six minutes in which to provide a verbal answer which showed at least a minimal
familiarity with the basic principles of physics.



For five minutes the student sat in silence, forehead creased in
thought. The arbiter reminded him that time was running out, to which the student
replied that he had several extremely relevant answers, but couldn't make up his mind
which to use.

On being
advised to hurry up the student replied as follows:



"Firstly, you could take the barometer up to the roof of the
skyscraper, drop it over the edge, and measure the time it takes to reach the ground.
The height of the building can then be worked out from the formula H = 0.5g x t squared.
But bad luck on the barometer."


"Or if the sun
is shining you could measure the height of the barometer, then set it on end and measure
the length of its shadow. Then you measure the length of the skyscraper's shadow, and
thereafter it is a simple matter of proportional arithmetic to work out the height of
the skyscraper."


"But if you
wanted to be highly scientific about it, you could tie a short piece of string to the
barometer and swing it like a pendulum, first at ground level and then on the roof of
the skyscraper. The height is worked out by the difference in the gravitational
restoring force T = 2 pi sqroot (l / g)."


"Or if the
skyscraper has an outside emergency staircase, it would be easier to walk up it and mark
off the height of the skyscraper in barometer lengths, then add them up."


"If you merely
wanted to be boring and orthodox about it, of course, you could use the barometer to
measure the air pressure on the roof of the skyscraper and on the ground, and convert
the difference in millibars into feet to give the height of the building."


"But since we
are constantly being exhorted to exercise independence of mind and apply scientific
methods, undoubtedly the best way would be to knock on the janitor's door and say to him
'If you would like a nice new barometer, I will give you this one if you tell me the
height of this skyscraper'."

The student
was Niels Bohr, the only person from Denmark to win the Nobel prize for Physics.


Disclaimer:
I am not copyright holder for this story. If you are, feel free to contact
me.

Forthcoming articles

1. Prisoner's Dilemma
2. Buyer's
Remorse
3. War of Attrition
4. Halo
Effect

Dollar Auction

It was proposed by economist economist Martin
Shubik. It illustrates a paradox brought about by traditional
rational choice
theory in which players with perfect
information in the game are compelled to make an ultimately irrational
decision based completely on a sequence of rational choices made throughout the
game.
Dollar auction is an all pay
auction having two player. The auction is for a dollar bill.
The game begins with one of the players bidding 1 cent, hoping to
make a 99 cent profit. The second player will quickly bid 2cents, as a 98 cent profit is
still desirable. Again,first bidder bids 3 cents,converting his loss of 1 cent into a
gain of 97 cents. In this way, a series of bids is maintained. However, a problem
becomes visible the moment bidding reaches 99 cents. Supposing that the other player had
bid 98 cents, he now has the choice of losing the 98 cents or bidding a dollar even,
which would make his profit zero. After that, the first player has a
choice of either losing 99 cents or bidding $1.01, and only losing one cent. After this
point the two players continue to bid the value up well beyond the dollar, and neither
stands to profit.The game actually has no equilibrium,
as two rational players in this game could theoretically lose all of their money to the
auctioneer. Both players stand to lose money, but the winning bidder loses about 99
cents less than the losing bidder.
To end the bidding war a bidder
can bid 99 cents more than the previous bid, leaving no bid that offers a potentially
higher profit (or smaller loss). (For example, Bidder 1 bids $x, Bidder 2 bids $x +
$0.99. If Bidder 1 were to bid $x + $0.99 + $0.01, he would be bidding to pay $x + $0.99
+ $0.01 for a prize of $1, or a total loss of $x-- the same as if he had not increased
his previous bid.) As a special case of this, if the first bidder immediately bids
$0.99, he will not be outbid by the other bidder, who has no potential to make a profit.
The first bidder will earn $0.01 in profit and the second bidder will pay nothing and
win nothing.

Back into business

Friends,
Throughout the March month, I have
been ill and was not able to update the posts.
Now I am back from
hospital and feeling well, I will be continuing my posts.

The problem with Logic

A Harvard scholar, Mr. Sean
Goldstein approaches a learned Rabbi telling him that he has a Doctorate in philosophy,
and would now like to learn the Talmud to round off or complete his knowledge. After
summing him up for a few minutes, the Rabbi told him " I seriously doubt that you are
ready to study Talmud. Its the deepest book of our people. If you wish however I am
willing to examine you in logic, and if you pass the test I will teach you Talmud. "The
young man agrees. Rabbi holds up two fingers " Two men come down a chimney. One comes
with a clean face and the other comes out with a dirty face. Which one washes his
face?
The young man stares at the Rabbi. " Is that a
test in Logic? The Rabbi nods.

" The one with the dirty face
washes his face" He answers wearily.
" Wrong.
The one with the clean face washes his face. Examine the simple logic. The one with the
dirty face looks at the one with theclean face and thinks his face is clean. The one
with the clean face looks at the one with the dirty face and thinks his face is dirty.
So the one with the clean face washes his face."

"Very clever" Says Goldstein. .
" Give me another test."
The Rabbi
again holds up two fingers " Two men come down a chimney. One comes out with a clean
face and the other comes out with a dirty face. which one washes his face?

" We have already established
that. The one with the clean face washes his face"

" Wrong. Each one washes his
face. Examine the simple logic. The one with the dirty face looks at the one with the
clean face and thinks his face is clean. The one with the clean face looks at the one
with the dirty face and thinks his face is dirty. So the one with the clean face washes
his face. When the one with the dirty face sees the one with the clean face washing his
face, he also washes his face. So each one washes his
face"
" I didn't think of that! "
Says Goldstein. " Its shocking to me that I could make an error in logic. Test me
again!."
The Rabbi holds up two fingers
" Two men come down a chimney. One comes out with a clean face and the other comes out
with a dirty face. Which one washes his face?

" Each one washes his
face"
" Wrong. Neither one washes his
face. Examine the simple logic. The one with the dirty face looks at the one with the
clean face andthinks his face is clean. The one with the clean face looks at the one
with the dirty face and thinks his face is dirty. But when the one with clean face sees
that the one with the dirty face doesn't wash his face, he also doesn't wash his face So
neither one washes his face"
Goldstein
is desperate. " I am qualified to study Talmud. Please give me one more
test"
He groans when the Rabbi lifts
his two fingers "Two men come down a chimney. One comes out with a clean face and the
other comes out with
a dirty face. Which one washes
his face?
" Neither one washes his
face"
" Wrong. Do you now see, Sean,
why Socrates logic is an insufficient basis for studying the Talmud? Tell me, how is it
possible for two men to come down the same chimney, and for one to come out with a clean
face and the other with a dirty face? Dont you see? The whole question is narishkeit -
foolishness - and if you spend your life trying to answers foolish questions, all your
answers will be
foolish."

Disclaimer:
I do not own this story. I don't know if some one is copyright holder for this story. If
someone has copyright for this story please contact me at limit[dot]dgp[at]gmail[dot]com
so that I could show the credit or remove the
post.

Twitter is blocked

For friends, twitter is blocked in my company so will not be
available anymore

fsck

The Winner's Curse

This phenomenon is known as Winner's Curse. Let us take an example
and then we will talk on it.

A teacher comes in a
room with coin filled in a glass jar.The teacher gives option to the
student to guess for the total amount of money, the guy guessing largest amount of money
will be getting the jar for that price. Almost more than 60% of the student will be
bidding for nearest value of the sum in jar adhering to wisdom
of crowd and some will bid for quite lesser than the actual sum and
some will go for more than the actual sum. The guy winning the bid has paid more than
the item auctioned values. The winner always gets the feeling that he
overpaid.

First of all, let's see what common
value auction means. Common value auction is the type of auction where the item has got
a fixed value for all participant for example a 8-GB USB drive. Its market value is
fixed and costs equal for all. So, when in auction most of the people will be bidding
near the market value but the guy winning the bid must be bidding higher than other
fellows i.e. higher than its market price. So, after getting the product he gets a
felling that he could have bought it in lesser price in market.So, it becomes a losing
situation.

If the auction is not common value
auction then there is different situation. Lets take example for bidding of bat-mask and
bat-belt. I am a bat man fan so I could want to buy it for $150 but for one of my friend
who doesn't like batman at all it could have a value of less than $10. So , in this
case, the winner is not necessarily loser. One of the way to avoid winner's curse is to
bid closets to market price.

Technorati Tags:
winner, loser, auction, bidding, curse, money

Related Posts:
1.lostbid

The Resaon Communism Failed : II

10. Due to limited amount of resources, the is always a struggle to
get it and Someone will always get greedy enough for sharing it.(Thanks to
lupin)
11. Men have an affinity for their friends, family, acquaintance
than for a stranger, that makes commuism in a state to deviate to oligarchism.
12. Monetary Currency
13. Weapon Race
14.
Conspiracy from non-communist Capitalist Nations
15. It thinks highly
of wisdom of
crowd but not that highly of madness
of crowd
16. Reluctance of government to move toward pure
communism (statelessness)
17. Surplus
Value still exists thought the state is communist for cheap
labour.
18. Commodity
Fetishism remains in the mind of ruling body.

Secret Services and poor innocent Citizens

While talking to a team-mate I told her 'There is
a good news and a bad news for you guys.'
' What are those ?' she
asked.
' Good is that Pakistan admitted India attack
Links.'
' And What's bad ?'
'
Some RAW agents got caught in Pakistan
'
' Is it So? '
'Yes !', I
said.
Another of my team-mate interrupted 'Have you seen the movie
Main Hoon
Na ?'
'No', I said.
'They just
capture innocent citizen and show them as RAW
agent'.

Just two hours ago I was
reading a Pakistani news claiming vice versa.
'RAW
wields considerable influence in Nepal and the unfortunate people who got trapped by the
agency had gone to Nepal on legal travelling documents'.
'Kasab and many of those arrested in Nepal and
transferred to India would be killed in fake encounters and their bodies used to
authenticate sinister scenarios fabricated by Indian
agencies.'
The article was about 2006 detention of
Kasab from Nepal.
I don't know who is true or who is not . But
citizens of both countries believe that the other nation is capturing poor innocent
citizen in name of terrorist/secret agent.

The Resaon Communism Failed

1. State is run by politicians, not by economists.
2. Leaders confuse the final state of communism(statelessness) with anarchy(not
in philosophical sense).
3. Capitalist think they may lose market if
communism grows.
4. People prefer short term benefit over a long term
benefit.
5. Party rules, commune doesn't.
6.
Proletariat don't get access to capital
anyway.
7. The country embracing communism were poor.
8. Communist ideology always argues for the freedom of a person to think and
express in his ways but countries embracing communism never follow that.
9.Communist theory assumes that all humans are basically good, well motivated,
and possess equal capabilities and motivation.

To
be Continued...

Slumlog Millionaire and The Almighty Buck

Yesterday, Talking with one of my friend, Satyam
Nigam, I asked him

"Did you like
Slumdog Millionare ?"

"It was so-so" he
said.

"Do you think it has any chance of winning in
oscar ? "

"preety good chance
"

"Why so?
"

"See, I give you an analogy. India is an emerging
market. During early 90's there was less fashion consciousness in India and less people
were interested in fashion products. The strategy of global fashion market leaders
remained to exploit the potential market in India, From 1994 to 2000, 6 of the Indian
girls were Miss World/Universe. You can see the fashion market in India
now."

"So you want to say if Slumdog Millionare
wins the title, It will help global film production companies to penetrate Indian
Market"

"Or it can be made to win. It's all about
the Almighty Buck brother"

I kept wondering "Is it
so?"