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a year

Solutions to Prisoner's Dilemma. As I've shared on my last card, Prisoner's Dilemma is a model of real world activities. This card will deal with Iterative Prisoner's Dilemma.

The short version is that instead of playing the game just once, multiple games are played in sequence. This leads to interesting new questions the players can ask themselves, like what the other player did, and what they may do this time.

One way to look at this is that there is a consequence to betrayal. There is a clear short term gain for betrayal, but this would jeopardize potential payoff from cooperation. Because of this, now there is incentive not only to betray, but also to make the other player cooperate.

This starts an interesting challenge to create trust. By creating trust (such as by cooperating), you can get the other player to cooperate and reap the most benefit. Betrayal results in loss of this trust, and can cause lost payoff in the long term.

While creating trust is important, it is also important to ensure that the other player will not betray for personal gains, and punish such behaviors by betraying themselves.

However, this grudge can also be harmful, as this doesn't allow for returning to mutual cooperation.

In addition, changing the game itself can also affect which strategies are more successful.

Shorter rounds favor more selfish strategies, while increasing the reward for mutual cooperation can make cooperative strategies more successful.

This model can help us understand how cooperation evolved, and how to direct human behavior through policies that change the rewards.

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4 comments
Hanover Fiste
Trust and cooperation have the greatest long term returns. But short term betrayal will give the greatest reward. People such as drug dealers, especially cartels know that they can replace anyone, which makes them dangerous and cannot be trusted. Long term business partners, whom you know have a need and desire for the long run, are the ones you can trust. This is why ethics is becoming a big industry in itself. Companies have an ethics department, and hire ethics consultants. Break ethics and it's just like you have lost a license.
Philo 0316Author
Do you know where I can read up on this ethics department? It just sounds like what a PR department would be doing, and I can't seem to find any information on it. Do you know any specific companies that have ethics departments, maybe?
Hanover Fiste
Philo 0316, here's more. I've also seen reports of high projected growth for ethics consultants. Businesses know that being proactive in ethics will do them good, not just in PR, but in many other ways. I guess it's another invisible hand. https://www.bsr.org/our-insights/report-view/the-future-of-business-ethics-organizational-culture
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