Game Theory · 2024
Prisoner's Dilemma,
expanded.
The setup
Classical PD assumes fixed payoffs. In the real world, criminal collaborators face something the textbook ignores: the expected cost of being caught while en route between "cooperate" and "defect." We introduce a scalar φ — fear of capture — that scales the off-diagonal payoffs downward, and study how equilibria deform as φ moves.
Result
For φ above a threshold, the cooperate–cooperate cell becomes dominance-solvable — a result that is trivial in the original game but reappears with structure once fear is introduced. The threshold maps neatly to observable enforcement intensities.