Prisoner’s Dilemma (and What the Heck It Has to Do with Pricing)

April 6, 2017

Imagine this: you are arrested by the police for robbing a bank. You, of course, are innocent. They also arrest another person for the same crime. In the interrogation room, the police say, “We’ve caught your accomplice. You guys are in trouble. You should confess now to make your sentence easier.” Then they explain the possible sentences:

• If both you and the other person confess, you each get three years in prison
• If neither of you confesses, you each get one year in prison
• If you confess and the other person doesn’t, you go free and he spends five years in prison
• If the other person confesses and you don’t, he goes free and you spend five years in prison

What should you do? And what can this scenario teach you about pricing in a competitive landscape? Find out as pricing expert and Pragmatic Marketing instructor Mark Stiving walks you through the scenarios and provides real world examples of this pricing concept in the market today.

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