How is the Prisoner’s Dilemma like the Trade Discussions?

August 15, 2019

According to Wikipedia, the prisoner’s dilemma is a paradox in decision analysis in which two individuals acting in their own self-interests do not produce the optimal outcome. It is one of the most well-known concepts in modern game theory. The typical prisoner’s dilemma is set up in such a way that both parties choose to protect themselves at the expense of the other participant. As a result, both participants find themselves in a worse state than if they had cooperated with each other in the decision-making process. 

One could make the parallel with the U.S and China trade talks. It is debatable how this will turn out and which side will declare itself the winner; most likely both will. What is trending is the market volatility that seems to be occurring in part because of this debate/negotiation.

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