ECON 305 Lecture Notes - Lecture 4: Utility
11 Dec 2014
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Document Summary
Eliciting cooperation via tit for tat behaviour. One simple but powerful strategy to elicit cooperation where the prisoner"s dilemma would otherwise dictate non-cooperative behaviour is tit for tat. Assumptions: at least one of the players knows the value of cooperation and is prepared to take limited steps to get to his rival(s) to cooperate as well. If there is only one play to the game, this strategy would be defeating. If learning is important, a could employ tit for double tat . Low payoffs for a and b, where payoff a < payoff b. B eventually learns: higher payoffs, where payoff a = payoff b. B comprehends immediately: even higher payoffs, where payoff a = payoff b. Cooperation might be rational even if legally not enforceable. Independently acting firms may cooperate because they understand it is in their best interest as well as in the collective interest. Outcomes: si, sj (some pairing of si, sj)
