A Dynamic Game-theoretic Approach to the Modified Prisoner's Dilemma

In this paper a paradox similar to the classical Prisoners’ Dilemma paradox is presented and analyzed using the theory of game transformation. This modified version of Prisoner’s Dilemma is more paradoxical than the classical one and the process of game transformation, recently introduced in literature, is used to transform an intractable initial game to a solvable final game with a stable equilibrium state, which is also a rational outcome of the game. The transformation takes into account intangibles like uncertainties, risks, threats, aspirations and converts them into player motivation in the form of a global goal, is arbitrary to start with but the transformation solution is shown to remove this arbitrariness.

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