14. Following are several well-known problems. Discuss whether they are instances of essentially the same problem as the Prisoner’s Dilemma discussed in Section 4.6.

If you conclude that a problem is equivalent to the Prisoner’s Dilemma, then design an appropriate payoff matrix. Comment on the existence of a Nash equilibrium and Pareto Optimal in each case.

a. Linux is a version of Unix that has been developed under the General Public License

(GPL). Under this agreement, you are given free software and may study the source code, which is modifiable. You can defect by keeping these improvements to yourself, or cooperate by distributing the improved version of the code. In fact, cooperation is forced by making it illegal to distribute only the source code without your improvements.

b. Cigarette companies were at one time allowed to advertise in the United States. If only one company decided to advertise, an increase in sales invariably followed. However, if two companies launched advertising campaigns, their ads would essentially cancel one another and no increase in revenue resulted.

c. In New Zealand newspaper boxes are left unlocked. One can easily steal a paper (defect).

Naturally, if everyone did this, no papers would remain. 9

d. (Tragedy of the Commons) There is a village with n farmers where grassland is limited.

Each of these farmers might decide to keep a sheep. Each farmer obtains some utility from these sheep in the form of wool and milk. However, the common grassland (the Commons) will suffer somewhat from a sheep’s grazing there.