From the FT
In the classic game theory case of the prisoner’s dilemma, two parties can either co-operate for some mutual gain, or each can sell out the other in the hope of a higher individual reward – but with the risk of losing everything if the other beats them to it.
This is the choice facing Anglo Irish junior bondholders when they vote this Friday on an exchange offer that, if approved, would see them receive just 20 per cent of the face value of their bonds.
Bondholders could work together to vote down the deal and force the bank to the negotiating table in the hope of a better offer – just as two theoretical prisoners who each stick to their agreed cover story can ensure neither is found to have committed the crime.
Read the whole thing.
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