It's nice to see a real life example of the prisoner's dilemma going against the Nash Equilibrium:
>Prosecutors had a weak hand, and they knew it. As a December 3, 2013, trial date approached, the Feds made Kane and Nestor separate but identical offers: The first one to agree to testify against the other would walk away with five years of probation and no jail time.
>The old gambling buddies had one more game to play together. It was the Prisoner's Dilemma. Without speaking, they both arrived at the optimal strategy: They refused the offer. A few months later, the Justice Department dropped the last of the charges, and they were free.
I don't think the Nash Equilibrium applies here. The consequence of defecting has to be better than cooperating, regardless of what the other player does. Here, you have to consider the probability that prosecution would be successful, which did not seem likely.
If you don't defect
-He defects first: You may or may not go to prison
-He doesn't defect: You may or may not go to prison
And if you defect first
-He defects second: You don't go to prison
-He doesn't defect: You don't go to prison
Still seems to me that the Nash Equilibrium is to defect. Not going to prison is better than probably not going to prison. According to the article, they still don't talk to each other, so it's not like the outcome would have changed much.
That was probably the logic the Feds used when designing this game. Actually, kind of surprising that Nestor did not go for it, based on my assessment of his character from this article.
>Prosecutors had a weak hand, and they knew it. As a December 3, 2013, trial date approached, the Feds made Kane and Nestor separate but identical offers: The first one to agree to testify against the other would walk away with five years of probation and no jail time.
>The old gambling buddies had one more game to play together. It was the Prisoner's Dilemma. Without speaking, they both arrived at the optimal strategy: They refused the offer. A few months later, the Justice Department dropped the last of the charges, and they were free.