During the Cold War the opposing alliances of NATO and the Warsaw Pact both had the choice to arm or disarm. From each side's point of view, disarming whilst their opponent continued to arm would have led to military inferiority and possible annihilation. Conversely, arming whilst their opponent disarmed would have led to superiority. If both sides chose to arm, neither could afford to attack the other, but at the high cost of developing and maintaining a nuclear arsenal. If both sides chose to disarm, war would be avoided and there would be no costs. Although the 'best' overall outcome is for both sides to disarm, the rational course for both sides is to arm, and this is indeed what happened. 'Mutually Assured Destruction' was the idea that waging war would be so destructive to both sides that neither could possibly win. Both sides poured enormous resources into military research and armament in a war of attrition for the next thirty years until reform in the Soviet Union caused ideological differences to abate.
The Cold War and arms race can be modeled as a Prisoner's Dilemma. The Prisoner's Dilemma is the story of two criminals who have been arrested for a heinous crime and are being interrogated separately. Each knows that if neither of them talks, the case against them is weak and they will be convicted and punished for lesser charges. If this happens, each will get 20 years in prison with the possibility of parole. If both 'rat' on each other, its a slam dunk case for the prosecution and they both face death sentences. If only one person 'rats' and testifies against the other, the one who did not cooperate will get the death sentence while the other will go free.
What would you do? Why?
How is this famous variation different from our class example? What was the surprising outcome?