Definition
The prisoner’s dilemma is a game theory that states that the situation between two separated parties is unable to interact with each other. A prisoner’s dilemma means two parties must choose to cooperate to get the highest reward.
Understanding the term
The prisoner’s dilemma definition in economics was first framed in 1950 by two scientists: Merrill Flood and Melvin Dresher when they worked at the RAND Corporation. While Flood and Dresher designed the prisoner’s dilemma, the phenomenon was named by Albert W. Tucker.
The prisoner’s dilemma definition also indicates that it is a classic example of a zero-sum game that can only be solved with the minimax theorem. Since cooperation is difficult to achieve between two parties that are closed off from communicating with each other, the prisoner’s dilemma is a smart solution to achieve cooperation. It plays a fundamental role within blockchain networks by managing disruptions of transactions occurring within the network in cryptocurrencies like Bitcoin.
Takeaways
The prisoner’s dilemma is an ideal theory to show why two concerned parties might not choose to cooperate with each other even if there is a possibility of getting the highest reward. Through the bull run of Bitcoin and other altcoins, global nations are considering accepting digital assets as an investment, which in turn has resulted in a prisoner’s dilemma situation focused on global crypto adoption.