You and your friend were both charged with a crime and detained separately, and you each have a chance to give a confession. Neither you nor your friend knows what the other will choose.

Here are the possibilities:

If you both confess, you both serve three years.

If neither of you confess, you serve only one year.

If you confess, but your friend doesn’t, you’re set free.

If you don’t confess, but your friend does, you serve five years.

Initially, you want to remain silent. If you’re both silent, the combined punishment is two years total: one for you, and one for your friend.

It’s better than both of you confessing, which leads to a combined punishment of six years, three for each of you.

However, if you don’t confess, but your friend does, you will be left with five years, while he is left with none, which is worse for you than if you both confessed or both stayed silent.

So even though you KNOW that if you both stay silent, you’ll receive the best possible combined punishment, your friend might confess, leaving you with five years.

So now you’re left with confessing. No matter what your friend chooses, you either will get three years, or you will go free, both of which are better options than getting five years in jail.

Your friend probably has the same mindset, so he will also confess, unwilling to take the risk. Therefore, you both get three years in jail, in order to avoid five years in jail, even though if you worked together you would spend one year in jail.

This is known as the prisoner’s dilemma.

Of course, you can both just trust that you guys are best friends and you would never betray each other, but that’s not my problem. We assume that everyone is working in their own best interest.

While a fun little thought experiment, the prisoner’s dilemma is the most famous gateway into game theory. Game theory is essentially the study of strategy, making the best decision based on what you think others involved will do. This is used in basically every situation where you have competitors or opponents who are also trying to get the best possible result.

So, if you want to win at Monopoly, maybe learn game theory.

Of course, the strategy becomes more complex when there are more players and more variables, so beware of the hole you might fall into.

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