Using game theory and computer simulations to explore the famous Prisoner’s Dilemma, which faces the realities of competition and cooperation, the emergence of the winning strategy, TIT FOR TAT, is presented.

• The purpose of the work undertaken by the author is to build a theory of what is necessary for cooperation to emerge, specifically under conditions in which individuals pursue their self-interest without the aid of a central authority to force them to cooperate. The reason for assuming self-interest is that is allows an examination of the difficult case in which cooperation is not completely based upon a concern for others or upon the welfare of the group as a whole." p. 6

• The method used to explore this is the Prisoner’s Dilemma game - in which two players have two choices, to cooperate or defect. "Each must make the choice without knowing what the other will do. No matter what the other does, defection yields a higher payoff than cooperation. The dilemma is that if both defect, both do worse than if both had cooperated." p. 7-8

• The author invited specialists in game theory to submit strategies and each was tested against other submitted strategies via computer simulation.

• The winning strategy was TIT FOR TAT - "the strategy which cooperates on the first move and then does whatever the other player did on the previous move." p. 20

• Analysis of the computer data identified four properties which led to the success of TIT FOR TAT: "avoidance of unnecessary conflict by cooperating as long as the other player does; provocability in the face of an uncalled for defection by the other; forgiveness after responding to a provocation; and clarity of behavior so that the other player can adapt to your pattern of action." p. 20

• "The results of the tournaments demonstrate that under suitable conditions, cooperation can indeed emerge in a world of egoists without central authority...The evolution of cooperation requires that individuals have a sufficiently large chance to meet again so that they have a stake in their future interaction." p. 20

Key Point: The four key rules for scoring well in circumstances where one is forced to select either cooperative or competitive strategies - 1) Don’t be envious, 2) Don’t be the first to defect, 3) Reciprocate both cooperation and defection, 4) Don’t be too clever.

• This chapter offers advice to those faced with a Prisoner’s Dilemma - on how to score as well as possible over a series of interactions with another player who is also trying to score well. "Since the game is the Prisoner’s Dilemma, the payer has a short-run incentive to defect, but can do better in the long run by developing a pattern of mutual cooperation with the other....The advice takes the form of four simple suggestions for how to do well in a durable iterated Prisoner’s Dilemma." p. 109-110

• 1. Don’t be envious - "People are used to thinking about zero-sum interactions....But most of life is not zero-sum. Generally, both sides can do well, or both can do poorly. Mutual cooperation is possible, but not always achieved....People tend to resort to the standard of comparison they have available - and this standard is often the success of the other player relative to their own success. This standard leads to envy. And envy leads to attempts to rectify any advantage the other players has attained...and rectification can only be done by defection. But defection leads to more defection and mutual punishment. So envy is self-destructive. Asking how well you are doing compared to how well the other player is doing is not a good standard unless your goal in to destroy the other player....A better standard of comparison is how well you are doing relative to how well someone else could be doing in your shoes....TIT FOR TAT scored the highest against all other strategies...not by beating the other player, but by eliciting behavior from the other player which allowed both to do well....So in a non-zero-sum world you do not have to do better than the other player to do well yourself. This is especially true when you are interacting with many different players. Letting each of them do the same or a little better than you is fine, as long as you tend to do well yourself. There is no point in being envious of the success of the other player, since in an iterated Prisoner’s Dilemma of long duration the other’s success is virtually a prerequisite of your doing well yourself." p. 110-112

• 2. Don’t be the first to defect - "Both the tournament and the theoretical results show that it pays to cooperate as long as the other player is cooperating. The tournament results...are very striking. The best single predictor of how well a rule (strategy) performed was whether or not is was nice, which is to say, whether or not it would ever be the first to defect." p. 113

• 3. Reciprocate both cooperation and defection - "The extraordinary success for TIT FOR TAT leads to some simple by powerful advice: practice reciprocity. After cooperating on the first move, TIT FOR TAT simply reciprocates whatever the other player did on the previous move. This simple rule is amazingly robust....TIT FOR TAT not only does well with the original great variety of rules, but also does well with successful rules which would be likely to show up in the future in greater proportions. It does not destroy the basis of its own success. On the contrary, it thrives on interactions with other successful rules." p. 118
  

• 4. Don’t be too clever - "The tournament results show that in a Prisoner’s Dilemma situation it is easy to be too clever....A common problem with these rules (other strategies) is that they used complex methods of making inferences about the other player - and these inferences were wrong....But the heart of the problem was that these maximizing rules did not take into account that their own behavior would lead the other player to change....Rules that try to maximize their own score while treating the other player as a fixed part of the environment ignore this aspect of interaction... Therefore, it does not pay to be clever in modeling the other player if you leave out the reverberating process in which the other player is adapting to you, you are adapting to the other, and then the other is adapting to your adaptation and so on....One way to account for TIT FOR TAT’s great success...is that it has great clarity: it is eminently comprehensible to the other player. When you are using TIT FOR TAT, the other player has an excellent chance of understanding what you are doing. Your one-for-one response to any defection is an easy pattern to appreciate. Your future behavior can then be predicted. Once this happens, the other player can easily see that the best way to deal with TIT FOR TAT is to cooperate with it. Assuming that the game is sufficiently likely to continue for at least one more interaction, there is no better plan when meeting a TAT FOR TAT strategy than to cooperate now so that you will be the recipient of a cooperation on the very next move." p. 120-123

Key Point: Enlarge the shadow of the future, change the payoffs, teach people to care about each other, teach reciprocity, and improve recognition abilities are presented as means to foster a cooperative environment.

• 1. Enlarge the shadow of the future - "Mutual cooperation can be stable if the future is sufficiently important relative to the present. This is because the players can each use an implicit threat of retaliation against the other’s defection - if the interaction will last long enough to make the threat effective....as the shadow of the future becomes smaller, it stops paying to be cooperative with another player - even if the other player will reciprocate your cooperation....This conclusion emphasizes the importance of the first method of promoting cooperation: enlarging the shadow of the future. There are two basic ways of doing this: by making the interactions more durable, and by making them more frequent (i.e., specialize your business so it interacts with only a few other organizations, group employees working on related tasks together, in bargaining context - break the issues into small pieces to promote more frequent interactions)." p. 126-132

• 2. Change the payoffs - "...make the long-term incentive for mutual cooperation greater than the short-term incentive for defection....Large changes in the payoff structure can transform the interaction so that it is no longer even a Prisoner’s Dilemma. If the punishment for defection is so great that cooperation is the best choice in the short run, no matter what the other player does, then there is no longer a dilemma." p. 134

• 3. Teach people to care about each other - "An excellent way to promote cooperation in a society is to teach people to care about the welfare of others."
  

• 4. Teach reciprocity - "A community using strategies based upon reciprocity can actually police itself. By guaranteeing the punishment of any individual who tries to be less than cooperative, the deviant strategy is made unprofitable. Therefore the deviant will not thrive, and will not provide an attractive model for others to imitate. This self-policing feature gives you an extra incentive to teach it to others, even those with whom you will never interact...the other’s reciprocity helps police the entire community by punishing those who try to be exploitive. And this decreases the number of uncooperative individuals you will have to deal with in the future." p. 136-139

• 5. Improve recognition abilities - "The ability to recognize the other player from past interactions, and to remember the relevant features of those interactions, is necessary to sustain cooperation." p. 139

Key Point: Cooperation can get started by a small cluster of individuals who are prepared to cooperate and once cooperation is established, it can protect itself from invasion by uncooperative strategies.

• "The foundation of cooperation is not really trust, but the durability of the relationship...Whether the players trust each other or not is less important in the long run than whether the conditions are ripe for them to build a stable pattern of cooperation with each other." p. 182

• "Just as the future is important for the establishment of the conditions for cooperation, the past is important for the monitoring of actual behavior. It is essential that the players are able to observe and respond to each other’s prior choices. Without this ability to use the past, defections could not be punished, and the incentive to cooperate would disappear." p. 182

• "Cooperation Theory has implications for individual choice as well as for the design of institutions. Speaking personally, one of my biggest surprises in working on this project has been the value of provocability. I came to this project believing one should be slow to anger. The results of the Computer Tournament for the Prisoner’s Dilemma demonstrate that it is actually better to respond quickly to a provocation. It turns out that if one waits to respond to uncalled for defections, there is a risk of sending the wrong signal. The longer defections are allowed to go unchallenged, the more likely it is that the other players will draw the conclusion that defection can pay. And the more strongly this pattern is established, the harder it will be to break it. The implication is that it is better to be provocable sooner, rather than later. The success of TIT FOR TAT certainly illustrate this point. By responding right away, it gives the quickest possible feedback that a defection will not pay." p. 184-185

• "We might come to see more clearly that there is a lesson in the fact that TIT FOR TAT succeeds without doing better than anyone with whom it interacts. It succeeds by eliciting cooperation from others, not by defeating them. We are used to thinking about competitions in which there is only one winner, competitions such as football or chess. But the world is rarely like that. In a vast range of situations mutual cooperation can be better for both sides than mutual defection. The key to doing well lies not in overcoming others, but in eliciting their cooperation." p. 189-190