The global capitalist system is in a state where each individual actor is trying to maximize their own short-term gain, even if it comes at the expense of long-term stability or the well-being of the group.
That often leads to suboptimal outcomes for everybody involved, analogous to the Prisoner’s Dilemma problem.
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Scroll down, you see I am writing this article to explain the infamous paper “Volatility and the Allegory of the Prisoner’s Dilemm” by artemis capital.
In the original problem, two criminal gang members are arrested and imprisoned. Each prisoner is in solitary confinement and cannot communicate with the other. The prosecutors lack sufficient evidence to convict the pair on the principal charge, but they have enough to convict both on a lesser charge.
Prisoner A is told that if he testifies against his accomplice and convicts him, he will be sentenced to only one year in jail. If he remains silent, he will be sentenced to three years. Prisoner B is given the same options.
If both prisoners remain silent, they will each serve only two years in jail.
However, if both of them testify against each other, each will be sentenced to four years in jail.
In the prisoner’s dilemma, each prisoner has two options: confess or remain silent. If both prisoners confess, they will receive a four-year sentence in jail.
If both prisoners remain silent, they will each receive a sentence of two years in jail. However, if one prisoner confesses and the other does not, the prisoner who confessed will receive a sentence of only one year in jail, while the prisoner who remained silent will receive a sentence of three years in jail.
Each prisoner must choose whether to confess or to remain silent without knowing what the other prisoner will do. If both prisoners confess, they will each receive a sentence of four years in jail.
In the global capitalist version of the Prisoner’s Dilemma, the two “criminals” are central banks, and the goal is to manipulate the cost…