PTE Summarize Spoken Text Repeated Questions – Online Material

So, for example, if you have a joint project that you’re working on, perhaps it’s a homework assignment, or perhaps it’s a video project like these guys, that can turn into a Prisoners’ Dilemma. Why? Because each individual might have an incentive to shirk. Price competition two firms competing with one another in prices can have a Prisoners’ Dilemma aspect about it. Why? Because no matter how the other firm, your competitor, prices you might have an incentive to undercut them. If both firms behave that way prices will get driven down towards marginal cost and industry profits will suffer. In first case, everyone shirks you end up with a bad product. In the second case, if both the good consumers but firms undercut each other, you end up with low prices, that’s actually for Let me mention a third example. Suppose there’s a common resource out there bad for firms. maybe it’s a fish stock or maybe it’s the atmosphere. There’s a Prisoners’ Dilemma aspect to this too. 

The lecture is about the game called prisoner’s dilemma, essentially it is about how in a joint project such as a group homework assignment people can share individual responsibility. This happens because individuals might have an incentive to actually not to departs. This happens in other areas such as price competition between firms where one firm can feel it has incentive to price lower than competative. Eventually it can result in both firms making less profits. This is also seen with other common resouces such as fish stock and atmosphere.