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An important reason for us to cover game theory is, in addition to learning how to think strategically, improving our logical reasoning and decision making in general. Game theory is also an important component in the design of technologies such as blockchains. This video explains how blockchain might help employees to oust a tyrannical boss, including the game theory of public goods behind the problem. Watch the video: https://www.youtube.com/watch?v=S7lEowH7Gu8
a. Summarise the problem of the tyrannical boss explained in the video and why it is modelled as a prisoner dilemma. Write the prisoner game matrix and find the equilibrium (without blockchain).
b. Explain how blockchain can help to solve the prisoner dilemma. Write the new matrix that includes outcomes when a blockchain is implemented. Find the new equilibrium (with blockchain).
c. Do you identify any other application where smart contracts can improve outcomes of a game?
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