Interesting side note on Tit for Tat strategy in practice:
For Wharton MBA negotiations courses, we used to have teams play a game that is essentially a repeat Prisoner's Dilemma: two teams would have to set their prices for selling "oil", and decide whether to "collude" or "defect" from an oligopoly scheme with the usual 2 x 2 PD grid of payouts.
BUT we would add some very realistic noise into the perceived outcomes - so sometimes teams could get a bad payoff even from colluding.
Lots of teams knew about Tit for Tat and tried to apply it. These were Wharton MBAs after all! But even when they were forewarned about the imperfect payoff signal, Tit for Tat was a disaster. The noisy outcomes would lead teams to punish each other left and right for misperceived violations, and trust would break down.
Interesting side note on Tit for Tat strategy in practice:
For Wharton MBA negotiations courses, we used to have teams play a game that is essentially a repeat Prisoner's Dilemma: two teams would have to set their prices for selling "oil", and decide whether to "collude" or "defect" from an oligopoly scheme with the usual 2 x 2 PD grid of payouts.
BUT we would add some very realistic noise into the perceived outcomes - so sometimes teams could get a bad payoff even from colluding.
Lots of teams knew about Tit for Tat and tried to apply it. These were Wharton MBAs after all! But even when they were forewarned about the imperfect payoff signal, Tit for Tat was a disaster. The noisy outcomes would lead teams to punish each other left and right for misperceived violations, and trust would break down.
Oooh that is really interesting!