We’ve previously understood how the prisoner’s dilemma works. Given the payoffs and the choices each of the two prisoners has, each of them will most likely work against each other as opposed to cooperating. The reason lies in the fact that humans are by nature selfish and will work towards one’s own goals. But what if it occurs a second time? What if they are offered another chance? Knowing the choice made by the other party, will they work against or with each other? This scenario is called the Iterated Prisoner’s Dilemma.
Iterated Prisoner’s Dilemma, also called the peace-war game, studies the cooperative behavior and trusting nature of man. But unlike the first round of prisoner’s dilemma, it is quite a challenge to predict how the prisoner will act. Each of them has to consider the other’s previous actions, predict his present action and determine the reason behind their actions. It’s a very calculative notion.
But analysts figured that although the options and actions may vary, each of the prisoner will likely defect in the end. This is done when the length of the game is a given. Why? If Prisoner A cooperates on the first round, Prisoner B will likely cooperate on the second round given the fact that he would predict that A would possibly also cooperate. But it’s our instinct to work against each other. To achieve this and not let to the other party know, Prisoner B can defect on the last turn since Prisoner A won’t know anyway and the odds will definitely go towards B. It’s always the last round since the outcome will no longer affect the actions of the other party and one can do as he pleases.
But the defection strategy won’t work if the length is unknown. Thus, many analysts were invited to come up with algorithms that could predict the right strategies. Of all the algorithms proposed, Rapoport’s deterministic strategy proved to be the best. He came up with a program written in BASIC that analyzes the tit-for-tat strategy of each player. Simply put, Prisoner A will act according to Prisoner B’s actions in the previous round and vice versa. It sums up man’s behavior of retaliating, forgiving and being nice. The algorithm proved to be the most optimal strategy for Iterated Prisoner’s Dilemma.
The Wonderful World of Algorithms 