Considering the Prisoner’s Dilemma in this chapter, provide your own insight on how sites such as eBay “work” for most participants of this popular online auction site. Do they really work? Or is there too much risk?
In chapter 8 of Here Comes Everybody Shirky describes the Prisoner's Dilemma and its effect on social dilemmas. In a Prisoner's Dilemma, there are four possible scenarios: One suspect confesses and goes free while the other gets a long sentence, the other suspect confesses and goes free while the first gets a long sentence, both confess and get medium sentences, or neither confesses and they both go free. The dominant strategy for each prisoner is to confess because they will either go free or get a medium sentence instead of the full sentence. Unless there is communication (i.e. they can see each other make the decision not to confess) or an external force enforcing the arrangement (i.e. they'll get killed if they don't cooperate). This dilemma does not just apply to criminals, but also in economics and social situations.
eBay has these four scenarios as well: the seller sends the product and the buyer pays, the seller sends the product but the buyer doesn't pay, the seller doesn't send the product but the buyer pays, or the seller doesn't send the product and the buyer doesn't pay. If their is no communication or external enforcement, their dominate strategies would be for both to cheat and not pay and not send. Personally I don't chose to use eBay hardly at all because there is the possibility of this risk (and high shipping, but that's besides the point). I think eBay is able to stay running because there is the possibility for communication (emailing the seller to see if they really sent it and vice versa) and eBay has begun to act as an external enforcement mechanism. They now have a policy where you can (in theory, I've never tried) get your money back if the product isn't sent or ins't like described. Just having the threat of this enforcement helps successful transactions occur. If these kinds of sites didn't work the majority of the time, sites like this wouldn't still operate.
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