The Prisoner's Dilemma
Nicole Genovaldi
Walden University

The Prisoner's Dilemma
In the Prisoner’s Dilemma, each person or business in competition has a goal is to choose the dominant strategy. If a business chooses the dominant strategy, the business will have a higher payoff, and there will be an unattractive payoff to the other business (Frank & Bernanke, 2008). There are two hair salons who cut hair in the same town, Salon A and Salon B. The owners of Salon A and Salon B are trying to determine what strategy will give them the biggest payoff. If Salon A lowers prices and Salon B does not lower their prices, the outcome will be Salon A will get more customers from Salon B, and achieve the best payoff or profit. Salon A is taking a risk that Salon B will not lower prices in order to get the biggest payoff. If Salon B lowers prices and Salon A does not lower prices, Salon B will take the customers away from Salon A and achieve the best payoff or profit. If Salon A and Salon B both lower prices, they will lose profit, and that will result in the lowest payoff. In the original prisoner’s dilemma, if both remain silent, Jasper and Horace both get a year in prison. The problem is the prisoners and businesses do not know what their competitor will do. In the case of the salons, if both Salon A and Salon B do not change prices, they will not get a big payoff. If their prices remain the same, the business will not take the chance of a loss if both salons lower their