Economics part deux
So, my presentation is done, and I shall now reveal what the map and the oil barrels were meant to do:
There are two countries. Persecutestand is the purple one and Oppressionland the green one:
Both countries are pretty much the only oil exporting countries in the region, meaning they dictate the oil supply. Together. Both countries are equally important in determining supply. If less oil is produced, it can be sold for a higher price and vice versa. Therefore, both countries have an incentive to produce less, since they'll earn more profit per barrel. Conversely, they'll earn less if both produce more oil, as they can charge less per barrel. However, the best situation for any country is if they produce more and the other produces less, since they'll be able to sell a lot of oil for a moderate price, making more money than they would selling a lot of oil for a low price or a little oil for a high price. Course that really sucks for the country that produced less oil, because they get less money than if they sold a lot of oil for a low price.
This relationship can be represented in the following graph:
Now, we assume that neither country will act in a manner that is detrimental to its self-interest (in this case making money). So both countries will try to maximize their profits. But in doing so, they reduce their profits! By cooperating, and acting against their individual self interest, they're actually better off! That is the subtle beauty of the prisoners' dilemma.
There are two countries. Persecutestand is the purple one and Oppressionland the green one:
Both countries are pretty much the only oil exporting countries in the region, meaning they dictate the oil supply. Together. Both countries are equally important in determining supply. If less oil is produced, it can be sold for a higher price and vice versa. Therefore, both countries have an incentive to produce less, since they'll earn more profit per barrel. Conversely, they'll earn less if both produce more oil, as they can charge less per barrel. However, the best situation for any country is if they produce more and the other produces less, since they'll be able to sell a lot of oil for a moderate price, making more money than they would selling a lot of oil for a low price or a little oil for a high price. Course that really sucks for the country that produced less oil, because they get less money than if they sold a lot of oil for a low price.
This relationship can be represented in the following graph:
Now, we assume that neither country will act in a manner that is detrimental to its self-interest (in this case making money). So both countries will try to maximize their profits. But in doing so, they reduce their profits! By cooperating, and acting against their individual self interest, they're actually better off! That is the subtle beauty of the prisoners' dilemma.