Page 1 of 1 [ 4 posts ] 

LostInEmulation
Veteran
Veteran

User avatar

Joined: 10 Feb 2008
Age: 37
Gender: Female
Posts: 2,047
Location: Ireland, dreaming of Germany

10 Jan 2009, 7:54 am

Yesterday, I was tired and while I was playing Aisleriot, I suddenly started thinking about the Prisoners' dilemma in game theory:

Quote:
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") for the prosecution against the other and the other remains silent, 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?

http://en.wikipedia.org/wiki/Prisoners'_Dilemma

Then I thought that Subsidies are a kind of prisoners' dilemma for governments. It would be most advantageous for all governments not to subsidize industry. When only a few or even one uses subsidies it can mean that more industry settles there. But since most nations do it, it does not even make that much of a difference and other factors are more important. But it would put the government, which stops doing it at a disadvantage. Of course this commits the fallacy of grouping all companies into one group, some might prefer lower taxes to this.

However seeing that most comapies are probably as described... is there a chance to see the IMHO harmful culture of subsidy-giving cease?


_________________
I am not a native speaker. Please contact me if I made grammatical mistakes in the posting above.

Penguins cannot fly because what cannot fly cannot crash!


Shiggily
Veteran
Veteran

User avatar

Joined: 1 Dec 2008
Age: 37
Gender: Female
Posts: 1,317

10 Jan 2009, 8:35 am

game theory is applicable to all areas including economics, politics and war.


_________________
ADHD-diagnosed
Asperger's Syndrome-diagnosed


LostInEmulation
Veteran
Veteran

User avatar

Joined: 10 Feb 2008
Age: 37
Gender: Female
Posts: 2,047
Location: Ireland, dreaming of Germany

10 Jan 2009, 9:28 am

Shiggily wrote:
game theory is applicable to all areas including economics, politics and war.

I know... it's a very interesting topic. I wondered more whether my thought makes any form of sense...


_________________
I am not a native speaker. Please contact me if I made grammatical mistakes in the posting above.

Penguins cannot fly because what cannot fly cannot crash!


Awesomelyglorious
Veteran
Veteran

User avatar

Joined: 17 Dec 2005
Gender: Male
Posts: 13,157
Location: Omnipresent

10 Jan 2009, 1:06 pm

Your argument makes some sense, however, it can be argued that there would likely be an optimal strategy in this case, given the fact that this isn't a prisoner's dilemma, however, I am not sure about the empirical evidence for where this would be, I know that some research argues that subsidies do not pay back, but I doubt all research says that. In any case, I do not think that subsidies are necessary for a working economy, only friendly enough laws, because in a developed economy, with laws that do not hurt employment or growth, I would think that businesses would expand to use all available resources anyway, thus leading to a steady economy that is about as good as other economies. The only area where I think I've heard competitiveness possibly mattering is in technology, due to the externalities that a bit of technology sometimes creates.