How Game Theory Can Be Applied to Economics Tuition

Game theory is a very interesting economic concept. It is an economic concept that is taught in every university course on economics, regardless of the university you attend in the world. Some of the famous concepts of game theory include the prisoner’s dilemma and the battle of the sexes. The prisoner’s dilemma, in particular, is widely applied to solve problems across many different fields and has produced good results. However, no economics tutor has applied the prisoner’s dilemma to economics tuition. This is unusual given the high popularity of economics tuition in many countries, particularly in Singapore. The truth is game theory can be used to explain to a large extent the high popularity of economics tuition in Singapore.

The Prisoner’s Dilemma

In the original form, which one can learn in economics tuition from an experienced economics tutor, the prisoner’s dilemma assumes that the police arrest two members of a criminal gang and keep each of them in solitary confinement in a prison. This means that the two prisoners have no means of communicating with each other. Due to lack evidence to convict the two prisoners on the principal charge, the prosecutor hopes to put them behind bar for a year on a lesser charge. At the same time, the prosecutor offers each of the prisoners a bargain. Under the bargain, each prisoner can choose to confess to the principal charge and testify that the other prisoner committed the crime, or choose not to confess by remaining silent. The offer is if both prisoners confess, each of them will serve two years in prison. If both prisoners do not confess, each of them will serve one year in prison on the lesser charge. If one prisoner confesses and the other does not, the prisoner who confesses will be set free and the prisoner who does not will serve three years in prison.

Given the options, the two prisoners will prefer the outcome of ‘don’t confess, don’t confess’ to the outcome of ‘confess, confess’. However, the two prisoners will actually end up confessing, which may seem surprising to many at first thought. However, if one takes a closer examination at the options that each prisoner is given, they will immediately realise that the outcome is the result of human logic at work. Put yourself in the shoes of one of the prisoners. If the other prisoner chooses to confess, you will serve two years in prison instead of three if you confess. If the other prisoner chooses not to confess, you will be set free instead of serving one year in prison if you confess. Therefore, ‘confess’ will be your dominant strategy. In other words, it will be in your best interest to confess regardless of what you think the other prisoner will choose to do. Assume that both the prisoners are rational and therefore will reason along the same line, both will adopt the dominant strategy of ‘confess’.

The Prisoner’s Dilemma and Economics Tuition

The pre-university course on economics offered by the junior colleges in Singapore is one of the hardest for its level. Therefore, students who take economics in junior college find it useful to have economics tuition from a good economics tutor as it will substantially improve their grades. Consider yourself as a student taking economics in junior college. If other students take economics tuition, it will be important for you to take economics tuition as failure to do so is likely to mean a poorer grade for you, assuming curved grading. If other students do not take economics tuition, you are likely to get a better grade if you take economics tuition, assuming curved grading. Therefore, taking economics tuition will be your dominant strategy. This could explain why most of the junior college students who take economics have economics tuition in one form or another.

Linda Geng

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