You and an opponent each choose to Cooperate or Defect. Your payoffs depend on both choices:
| Opponent | |||
|---|---|---|---|
| Cooperate | Defect | ||
| You | Cooperate | 3, 3 | 0, 5 |
| Defect | 5, 0 | 1, 1 | |
Payoffs shown as: Your points, Opponent's points
You will play 10 rounds against an AI opponent. Can you figure out its strategy?
| Opponent | |||
|---|---|---|---|
| Cooperate | Defect | ||
| You | Cooperate | 3, 3 | 0, 5 |
| Defect | 5, 0 | 1, 1 | |
| Round | You | Opponent | Your Points | Opponent Points |
|---|
No rounds played yet.
Nash Equilibrium: In a one-shot Prisoner's Dilemma, Defect is the dominant strategy for both players. No matter what the other player does, you earn more by defecting. When both follow this logic, both defect and earn only 1 point each -- even though mutual cooperation would yield 3 points each. This (Defect, Defect) outcome is the Nash Equilibrium.
Dominant Strategy: A strategy is dominant when it is the best response regardless of what the other player chooses. Here, Defect dominates Cooperate: if the opponent cooperates, defecting gives you 5 > 3; if the opponent defects, defecting gives you 1 > 0.
Why Cooperation Is Hard: Individual rationality leads to a collectively worse outcome. Each player has an incentive to defect, but when both do, both are worse off. This tension between individual and collective rationality is at the heart of many economic problems.
Real-World Examples:
Your AI opponent used the Tit-for-Tat strategy, one of the most successful strategies in repeated Prisoner's Dilemma tournaments (discovered by Anatol Rapoport).
How it works: Cooperate on the first round, then copy whatever the opponent did in the previous round. It is simple, forgiving (returns to cooperation after the opponent does), and retaliatory (punishes defection immediately).
Repeated vs. One-Shot Games: In a single game, defecting is rational. But when the game repeats, cooperation becomes sustainable because players can punish defection in future rounds. The threat of future punishment changes the calculus -- this is called the "shadow of the future."
Key Insight: Institutions, contracts, and repeated interactions help sustain cooperation by converting one-shot dilemmas into repeated games. This is why ongoing business relationships, trade agreements, and legal systems are so important in economics.