Prisoner's dilemma

The "donation game"[12] is a form of prisoner's dilemma in which cooperation corresponds to offering the other player a benefit b at a personal cost c with b > c. Defection means offering nothing. The payoff matrix is thus

Note that ${\displaystyle 2R>T+S}$ (i.e. ${\displaystyle 2(b-c)>b-c}$) which qualifies the donation game to be an iterated game (see next section).

The donation game may be applied to markets. Suppose X grows oranges, Y grows apples. The marginal utility of an apple to the orange-grower X is b, which is higher than the marginal utility (c) of an orange, since X has a surplus of oranges and no apples. Similarly, for apple-grower Y, the marginal utility of an orange is b while the marginal utility of an apple is c. If X and Y contract to exchange an apple and an orange, and each fulfills their end of the deal, then each receive a payoff of b-c. If one "defects" and does not deliver as promised, the defector will receive a payoff of b, while the cooperator will lose c. If both defect, then neither one gains or loses anything.

Interest in the iterated prisoner's dilemma (IPD) was kindled by Robert Axelrod in his book The Evolution of Cooperation (1984). In it he reports on a tournament he organized of the N step prisoner's dilemma (with N fixed) in which participants have to choose their mutual strategy again and again, and have memory of their previous encounters. Axelrod invited academic colleagues all over the world to devise computer strategies to compete in an IPD tournament. The programs that were entered varied widely in algorithmic complexity, initial hostility, capacity for forgiveness, and so forth.

Axelrod discovered that when these encounters were repeated over a long period of time with many players, each with different strategies, greedy strategies tended to do very poorly in the long run while more altruistic strategies did better, as judged purely by self-interest. He used this to show a possible mechanism for the evolution of altruistic behavior from mechanisms that are initially purely selfish, by natural selection.

The winning deterministic strategy was tit for tat, which Anatol Rapoport developed and entered into the tournament. It was the simplest of any program entered, containing only four lines of BASIC, and won the contest. The strategy is simply to cooperate on the first iteration of the game; after that, the player does what his or her opponent did on the previous move. Depending on the situation, a slightly better strategy can be "tit for tat with forgiveness". When the opponent defects, on the next move, the player sometimes cooperates anyway, with a small probability (around 1–5%). This allows for occasional recovery from getting trapped in a cycle of defections. The exact probability depends on the line-up of opponents.

By analysing the top-scoring strategies, Axelrod stated several conditions necessary for a strategy to be successful.

Nice

The most important condition is that the strategy must be "nice", that is, it will not defect before its opponent does (this is sometimes referred to as an "optimistic" algorithm). Almost all of the top-scoring strategies were nice. A purely selfish strategy will not "cheat" on its opponent, for purely self-interested reasons first.

Retaliating

However, Axelrod contended, the successful strategy must not be a blind optimist. It must sometimes retaliate. An example of a non-retaliating strategy is Always Cooperate. This is a very bad choice, as "nasty" strategies will ruthlessly exploit such players.

Forgiving

Successful strategies must also be forgiving. Though players will retaliate, they will once again fall back to cooperating if the opponent does not continue to defect. This stops long runs of revenge and counter-revenge, maximizing points.

Non-envious

The last quality is being non-envious, that is not striving to score more than the opponent.

The optimal (points-maximizing) strategy for the one-time PD game is simply defection; as explained above, this is true whatever the composition of opponents may be. However, in the iterated-PD game the optimal strategy depends upon the strategies of likely opponents, and how they will react to defections and cooperations. For example, consider a population where everyone defects every time, except for a single individual following the tit for tat strategy. That individual is at a slight disadvantage because of the loss on the first turn. In such a population, the optimal strategy for that individual is to defect every time. In a population with a certain percentage of always-defectors and the rest being tit for tat players, the optimal strategy for an individual depends on the percentage, and on the length of the game.

In the strategy called Pavlov, win-stay, lose-switch, faced with a failure to cooperate, the player switches strategy the next turn.[15] In certain circumstances, Pavlov beats all other strategies by giving preferential treatment to co-players using a similar strategy.

Deriving the optimal strategy is generally done in two ways:

• Bayesian Nash equilibrium: If the statistical distribution of opposing strategies can be determined (e.g. 50% tit for tat, 50% always cooperate) an optimal counter-strategy can be derived analytically.[lower-alpha 1]
• Monte Carlo simulations of populations have been made, where individuals with low scores die off, and those with high scores reproduce (a genetic algorithm for finding an optimal strategy). The mix of algorithms in the final population generally depends on the mix in the initial population. The introduction of mutation (random variation during reproduction) lessens the dependency on the initial population; empirical experiments with such systems tend to produce tit for tat players (see for instance Chess 1988), but no analytic proof exists that this will always occur.[17]

Although tit for tat is considered to be the most robust basic strategy, a team from Southampton University in England introduced a new strategy at the 20th-anniversary iterated prisoner's dilemma competition, which proved to be more successful than tit for tat. This strategy relied on collusion between programs to achieve the highest number of points for a single program. The university submitted 60 programs to the competition, which were designed to recognize each other through a series of five to ten moves at the start.[18] Once this recognition was made, one program would always cooperate and the other would always defect, assuring the maximum number of points for the defector. If the program realized that it was playing a non-Southampton player, it would continuously defect in an attempt to minimize the score of the competing program. As a result, the 2004 Prisoners' Dilemma Tournament results show University of Southampton's strategies in the first three places, despite having fewer wins and many more losses than the GRIM strategy. (In a PD tournament, the aim of the game is not to "win" matches – that can easily be achieved by frequent defection). This strategy ended up taking the top three positions in the competition, as well as a number of positions towards the bottom.

The Southampton strategy takes advantage of the fact that multiple entries were allowed in this particular competition and that the performance of a team was measured by that of the highest-scoring player (meaning that the use of self-sacrificing players was a form of minmaxing). In a competition where one has control of only a single player, tit for tat is certainly a better strategy. Because of this new rule, this competition also has little theoretical significance when analyzing single agent strategies as compared to Axelrod's seminal tournament. However, it provided a basis for analysing how to achieve cooperative strategies in multi-agent frameworks, especially in the presence of noise. In fact, long before this new-rules tournament was played, Dawkins, in his book The Selfish Gene, pointed out the possibility of such strategies winning if multiple entries were allowed, but he remarked that most probably Axelrod would not have allowed them if they had been submitted. It also relies on circumventing rules about the prisoner's dilemma in that there is no communication allowed between the two players, which the Southampton programs arguably did with their preprogrammed "ten move dance" to recognize one another; this only reinforces just how valuable communication can be in shifting the balance of the game.

Even without implicit collusion between software strategies (exploited by the Southampton team) tit for tat is not always the absolute winner of any given tournament; it would be more precise to say that its long run results over a series of tournaments outperform its rivals. (In any one event a given strategy can be slightly better adjusted to the competition than tit for tat, but tit for tat is more robust). The same applies for the tit for tat with forgiveness variant, and other optimal strategies: on any given day they might not "win" against a specific mix of counter-strategies. An alternative way of putting it is using the Darwinian ESS simulation. In such a simulation, tit for tat will almost always come to dominate, though nasty strategies will drift in and out of the population because a tit for tat population is penetrable by non-retaliating nice strategies, which in turn are easy prey for the nasty strategies. Richard Dawkins showed that here, no static mix of strategies form a stable equilibrium and the system will always oscillate between bounds.

In a stochastic iterated prisoner's dilemma game, strategies are specified by in terms of "cooperation probabilities".[19] In an encounter between player X and player Y, X's strategy is specified by a set of probabilities P of cooperating with Y. P is a function of the outcomes of their previous encounters or some subset thereof. If P is a function of only their most recent n encounters, it is called a "memory-n" strategy. A memory-1 strategy is then specified by four cooperation probabilities: ${\displaystyle P=\{P_{cc},P_{cd},P_{dc},P_{dd}\}}$, where ${\displaystyle P_{ab}}$ is the probability that X will cooperate in the present encounter given that the previous encounter was characterized by (ab). For example, if the previous encounter was one in which X cooperated and Y defected, then ${\displaystyle P_{cd}}$ is the probability that X will cooperate in the present encounter. If each of the probabilities are either 1 or 0, the strategy is called deterministic. An example of a deterministic strategy is the tit-for-tat strategy written as P={1,0,1,0}, in which X responds as Y did in the previous encounter. Another is the win–stay, lose–switch strategy written as P={1,0,0,1}, in which X responds as in the previous encounter, if it was a "win" (i.e., cc or dc) but changes strategy if it was a loss (i.e., cd or dd). It has been shown that for any memory-n strategy there is a corresponding memory-1 strategy that gives the same statistical results, so that only memory-1 strategies need be considered.[19]

If we define P as the above 4-element strategy vector of X and ${\displaystyle Q=\{Q_{cc},Q_{cd},Q_{dc},Q_{dd}\}}$ as the 4-element strategy vector of Y, a transition matrix M may be defined for X whose ij th entry is the probability that the outcome of a particular encounter between X and Y will be j given that the previous encounter was i, where i and j are one of the four outcome indices: cc, cd, dc, or dd. For example, from X's point of view, the probability that the outcome of the present encounter is cd given that the previous encounter was cd is equal to ${\displaystyle M_{cd,cd}=P_{cd}(1-Q_{dc})}$. (The indices for Q are from Y's point of view: a cd outcome for X is a dc outcome for Y.) Under these definitions, the iterated prisoner's dilemma qualifies as a stochastic process and M is a stochastic matrix, allowing all of the theory of stochastic processes to be applied.[19]

One result of stochastic theory is that there exists a stationary vector v for the matrix M such that ${\displaystyle v\cdot M=v}$. Without loss of generality, it may be specified that v is normalized so that the sum of its four components is unity. The ij th entry in ${\displaystyle M^{n}}$ will give the probability that the outcome of an encounter between X and Y will be j given that the encounter n steps previous is i. In the limit as n approaches infinity, M will converge to a matrix with fixed values, giving the long-term probabilities of an encounter producing j which will be independent of i. In other words, the rows of ${\displaystyle M^{\infty }}$ will be identical, giving the long-term equilibrium result probabilities of the iterated prisoners dilemma without the need to explicitly evaluate a large number of interactions. It can be seen that v is a stationary vector for ${\displaystyle M^{n}}$ and particularly ${\displaystyle M^{\infty }}$, so that each row of ${\displaystyle M^{\infty }}$ will be equal to v. Thus the stationary vector specifies the equilibrium outcome probabilities for X. Defining ${\displaystyle S_{x}=\{R,S,T,P\}}$ and ${\displaystyle S_{y}=\{R,T,S,P\}}$ as the short-term payoff vectors for the {cc,cd,dc,dd} outcomes (From X's point of view), the equilibrium payoffs for X and Y can now be specified as ${\displaystyle s_{x}=v\cdot S_{x}}$ and ${\displaystyle s_{y}=v\cdot S_{y}}$, allowing the two strategies P and Q to be compared for their long term payoffs.

The relationship between zero-determinant (ZD), cooperating and defecting strategies in the iterated prisoner's dilemma (IPD) illustrated in a Venn diagram. Cooperating strategies always cooperate with other cooperating strategies, and defecting strategies always defect against other defecting strategies. Both contain subsets of strategies that are robust under strong selection, meaning no other memory-1 strategy is selected to invade such strategies when they are resident in a population. Only cooperating strategies contain a subset that are always robust, meaning that no other memory-1 strategy is selected to invade and replace such strategies, under both strong and weak selection. The intersection between ZD and good cooperating strategies is the set of generous ZD strategies. Extortion strategies are the intersection between ZD and non-robust defecting strategies. Tit-for-tat lies at the intersection of cooperating, defecting and ZD strategies.

In 2012, William H. Press and Freeman Dyson published a new class of strategies for the stochastic iterated prisoner's dilemma called "zero-determinant" (ZD) strategies.[19] The long term payoffs for encounters between X and Y can be expressed as the determinant of a matrix which is a function of the two strategies and the short term payoff vectors: ${\displaystyle s_{x}=D(P,Q,S_{x})}$ and ${\displaystyle s_{y}=D(P,Q,S_{y})}$, which do not involve the stationary vector v. Since the determinant function ${\displaystyle s_{y}=D(P,Q,f)}$ is linear in f, it follows that ${\displaystyle \alpha s_{x}+\beta s_{y}+\gamma =D(P,Q,\alpha S_{x}+\beta S_{y}+\gamma U)}$ (where U={1,1,1,1}). Any strategies for which ${\displaystyle D(P,Q,\alpha S_{x}+\beta S_{y}+\gamma U)=0}$ is by definition a ZD strategy, and the long term payoffs obey the relation ${\displaystyle \alpha s_{x}+\beta s_{y}+\gamma =0}$.

Tit-for-tat is a ZD strategy which is "fair" in the sense of not gaining advantage over the other player. However, the ZD space also contains strategies that, in the case of two players, can allow one player to unilaterally set the other player's score or alternatively, force an evolutionary player to achieve a payoff some percentage lower than his own. The extorted player could defect but would thereby hurt himself by getting a lower payoff. Thus, extortion solutions turn the iterated prisoner's dilemma into a sort of ultimatum game. Specifically, X is able to choose a strategy for which ${\displaystyle D(P,Q,\beta S_{y}+\gamma U)=0}$, unilaterally setting ${\displaystyle s_{y}}$ to a specific value within a particular range of values, independent of Y's strategy, offering an opportunity for X to "extort" player Y (and vice versa). (It turns out that if X tries to set ${\displaystyle s_{x}}$ to a particular value, the range of possibilities is much smaller, only consisting of complete cooperation or complete defection.[19])

An extension of the IPD is an evolutionary stochastic IPD, in which the relative abundance of particular strategies is allowed to change, with more successful strategies relatively increasing. This process may be accomplished by having less successful players imitate the more successful strategies, or by eliminating less successful players from the game, while multiplying the more successful ones. It has been shown that unfair ZD strategies are not evolutionarily stable. The key intuition is that an evolutionarily stable strategy must not only be able to invade another population (which extortionary ZD strategies can do) but must also perform well against other players of the same type (which extortionary ZD players do poorly because they reduce each other's surplus).[20]

Theory and simulations confirm that beyond a critical population size, ZD extortion loses out in evolutionary competition against more cooperative strategies, and as a result, the average payoff in the population increases when the population is larger. In addition, there are some cases in which extortioners may even catalyze cooperation by helping to break out of a face-off between uniform defectors and win–stay, lose–switch agents.[12]

While extortionary ZD strategies are not stable in large populations, another ZD class called "generous" strategies is both stable and robust. In fact, when the population is not too small, these strategies can supplant any other ZD strategy and even perform well against a broad array of generic strategies for iterated prisoner's dilemma, including win–stay, lose–switch. This was proven specifically for the donation game by Alexander Stewart and Joshua Plotkin in 2013.[21] Generous strategies will cooperate with other cooperative players, and in the face of defection, the generous player loses more utility than its rival. Generous strategies are the intersection of ZD strategies and so-called "good" strategies, which were defined by Akin (2013)[22] to be those for which the player responds to past mutual cooperation with future cooperation and splits expected payoffs equally if he receives at least the cooperative expected payoff. Among good strategies, the generous (ZD) subset performs well when the population is not too small. If the population is very small, defection strategies tend to dominate.[21]

Most work on the iterated prisoner's dilemma has focused on the discrete case, in which players either cooperate or defect, because this model is relatively simple to analyze. However, some researchers have looked at models of the continuous iterated prisoner's dilemma, in which players are able to make a variable contribution to the other player. Le and Boyd[23] found that in such situations, cooperation is much harder to evolve than in the discrete iterated prisoner's dilemma. The basic intuition for this result is straightforward: in a continuous prisoner's dilemma, if a population starts off in a non-cooperative equilibrium, players who are only marginally more cooperative than non-cooperators get little benefit from assorting with one another. By contrast, in a discrete prisoner's dilemma, tit-for-tat cooperators get a big payoff boost from assorting with one another in a non-cooperative equilibrium, relative to non-cooperators. Since nature arguably offers more opportunities for variable cooperation rather than a strict dichotomy of cooperation or defection, the continuous prisoner's dilemma may help explain why real-life examples of tit-for-tat-like cooperation are extremely rare in nature (ex. Hammerstein[24]) even though tit for tat seems robust in theoretical models.

Players cannot seem to coordinate mutual cooperation, thus often get locked into the inferior yet stable strategy of defection. In this way, iterated rounds facilitate the evolution of stable strategies.[25] Iterated rounds often produce novel strategies, which have implications to complex social interaction. One such strategy is win-stay lose-shift. This strategy outperforms a simple Tit-For-Tat strategy – that is, if you can get away with cheating, repeat that behavior. However if you get caught, switch.[26]

The only problem of this tit-for-tat strategy is that they are vulnerable to signal error. The problem arises when one individual cheats in retaliation but the other interprets it as cheating. As a result of this, the second individual now cheats, and then it starts a see-saw pattern of cheating in a chain reaction.

Even without repeated games, strong enlightened self-interest can result in a stable and efficient outcome.[27]

In environmental studies, the PD is evident in crises such as global climate-change. It is argued all countries will benefit from a stable climate, but any single country is often hesitant to curb CO₂ emissions. The immediate benefit to any one country from maintaining current behavior is perceived to be greater than the purported eventual benefit to that country if all countries' behavior was changed, therefore explaining the impasse concerning climate-change in 2007.[28]

An important difference between climate-change politics and the prisoner's dilemma is uncertainty; the extent and pace at which pollution can change climate is not known. The dilemma faced by governments is therefore different from the prisoner's dilemma in that the payoffs of cooperation are unknown. This difference suggests that states will cooperate much less than in a real iterated prisoner's dilemma, so that the probability of avoiding a possible climate catastrophe is much smaller than that suggested by a game-theoretical analysis of the situation using a real iterated prisoner's dilemma.[29]

Osang and Nandy (2003) provide a theoretical explanation with proofs for a regulation-driven win-win situation along the lines of Michael Porter's hypothesis, in which government regulation of competing firms is substantial.[30]

Cooperative behavior of many animals can be understood as an example of the prisoner's dilemma. Often animals engage in long-term partnerships, which can be more specifically modeled as iterated prisoner's dilemma. For example, guppies inspect predators cooperatively in groups, and they are thought to punish non-cooperative inspectors.[31]

Vampire bats are social animals that engage in reciprocal food exchange. Applying the payoffs from the prisoner's dilemma can help explain this behavior:[32]

• Cooperate/Cooperate: "Reward: I get blood on my unlucky nights, which saves me from starving. I have to give blood on my lucky nights, which doesn't cost me too much."
• Defect/Cooperate: "Temptation: You save my life on my poor night. But then I get the added benefit of not having to pay the slight cost of feeding you on my good night."
• Cooperate/Defect: "Sucker's Payoff: I pay the cost of saving your life on my good night. But on my bad night you don't feed me and I run a real risk of starving to death."
• Defect/Defect: "Punishment: I don't have to pay the slight costs of feeding you on my good nights. But I run a real risk of starving on my poor nights."

In addiction research / behavioral economics, George Ainslie points out[33] that addiction can be cast as an intertemporal PD problem between the present and future selves of the addict. In this case, defecting means relapsing, and it is easy to see that not defecting both today and in the future is by far the best outcome. The case where one abstains today but relapses in the future is the worst outcome – in some sense the discipline and self-sacrifice involved in abstaining today have been "wasted" because the future relapse means that the addict is right back where they started and will have to start over (which is quite demoralizing, and makes starting over more difficult). Relapsing today and tomorrow is a slightly "better" outcome, because while the addict is still addicted, they haven't put the effort in to trying to stop. The final case, where one engages in the addictive behavior today while abstaining "tomorrow" will be familiar to anyone who has struggled with an addiction. The problem here is that (as in other PDs) there is an obvious benefit to defecting "today", but tomorrow one will face the same PD, and the same obvious benefit will be present then, ultimately leading to an endless string of defections.

John Gottman in his research described in "The Science of Trust" defines good relationships as those where partners know not to enter the (D,D) cell or at least not to get dynamically stuck there in a loop. In cognitive neuroscience, fast brain signaling associated with processing different rounds may indicate choices at the next round. Mutual cooperation outcomes entail brain activity changes predictive of how quickly a person will cooperate in kind at the next opportunity;[34] this activity may be linked to basic homeostatic and motivational processes, possibly increasing the likelihood to short-cut into the (C,C) cell of the game.

The prisoner's dilemma has been called the E. coli of social psychology, and it has been used widely to research various topics such as oligopolistic competition and collective action to produce a collective good.[35]

Advertising is sometimes cited as a real-example of the prisoner's dilemma. When cigarette advertising was legal in the United States, competing cigarette manufacturers had to decide how much money to spend on advertising. The effectiveness of Firm A's advertising was partially determined by the advertising conducted by Firm B. Likewise, the profit derived from advertising for Firm B is affected by the advertising conducted by Firm A. If both Firm A and Firm B chose to advertise during a given period, then the advertisement from each firm negates the other's, receipts remain constant, and expenses increase due to the cost of advertising. Both firms would benefit from a reduction in advertising. However, should Firm B choose not to advertise, Firm A could benefit greatly by advertising. Nevertheless, the optimal amount of advertising by one firm depends on how much advertising the other undertakes. As the best strategy is dependent on what the other firm chooses there is no dominant strategy, which makes it slightly different from a prisoner's dilemma. The outcome is similar, though, in that both firms would be better off were they to advertise less than in the equilibrium. Sometimes cooperative behaviors do emerge in business situations. For instance, cigarette manufacturers endorsed the making of laws banning cigarette advertising, understanding that this would reduce costs and increase profits across the industry.[36][lower-alpha 2] This analysis is likely to be pertinent in many other business situations involving advertising.

Without enforceable agreements, members of a cartel are also involved in a (multi-player) prisoner's dilemma.[37] 'Cooperating' typically means keeping prices at a pre-agreed minimum level. 'Defecting' means selling under this minimum level, instantly taking business (and profits) from other cartel members. Anti-trust authorities want potential cartel members to mutually defect, ensuring the lowest possible prices for consumers.

Doping in sport has been cited as an example of a prisoner's dilemma.[38]

Two competing athletes have the option to use an illegal and/or dangerous drug to boost their performance. If neither athlete takes the drug, then neither gains an advantage. If only one does, then that athlete gains a significant advantage over their competitor, reduced by the legal and/or medical dangers of having taken the drug. If both athletes take the drug, however, the benefits cancel out and only the dangers remain, putting them both in a worse position than if neither had used doping.[38]

In a conversation with Ken Griffey Jr. after the 1998 MLB season, Barry Bonds expressed his frustration with other players' use of steroids. Bonds stated "I had a helluva season last year, and nobody gave a crap. Nobody. As much as I've complained about McGwire and Canseco and all of the bull with steroids, I'm tired of fighting it. I turn 35 this year. I've got three or four good seasons left, and I wanna get paid. I'm just gonna start using some hard-core stuff, and hopefully it won't hurt my body. Then I'll get out of the game and be done with it."[39] Bonds found himself in the prisoner's dilemma that is doping in baseball, the feeling that he has to use steroids so that his competitors don't have such a significant advantage over him, putting him on an even playing field, though everyone is worse off than if no one had used steroids at all.

In international political theory, the Prisoner's Dilemma is often used to demonstrate the coherence of strategic realism, which holds that in international relations, all states (regardless of their internal policies or professed ideology), will act in their rational self-interest given international anarchy. A classic example is an arms race like the Cold War and similar conflicts.[40] During the Cold War the opposing alliances of NATO and the Warsaw Pact both had the choice to arm or disarm. From each side's point of view, disarming whilst their opponent continued to arm would have led to military inferiority and possible annihilation. Conversely, arming whilst their opponent disarmed would have led to superiority. If both sides chose to arm, neither could afford to attack the other, but both incurred the high cost of developing and maintaining a nuclear arsenal. If both sides chose to disarm, war would be avoided and there would be no costs.

Although the 'best' overall outcome is for both sides to disarm, the rational course for both sides is to arm, and this is indeed what happened. Both sides poured enormous resources into military research and armament in a war of attrition for the next thirty years until the Soviet Union could not withstand the economic cost.[41] The same logic could be applied in any similar scenario, be it economic or technological competition between sovereign states.

Many real-life dilemmas involve multiple players.[42] Although metaphorical, Hardin's tragedy of the commons may be viewed as an example of a multi-player generalization of the PD: Each villager makes a choice for personal gain or restraint. The collective reward for unanimous (or even frequent) defection is very low payoffs (representing the destruction of the "commons"). A commons dilemma most people can relate to is washing the dishes in a shared house. By not washing dishes an individual can gain by saving his time, but if that behavior is adopted by every resident, the collective cost is no clean plates for anyone.

The commons are not always exploited: William Poundstone, in a book about the prisoner's dilemma, describes a situation in New Zealand where newspaper boxes are left unlocked. It is possible for people to take a paper without paying (defecting), but very few do, feeling that if they do not pay then neither will others, destroying the system.[43] Subsequent research by Elinor Ostrom, winner of the 2009 Nobel Memorial Prize in Economic Sciences, hypothesized that the tragedy of the commons is oversimplified, with the negative outcome influenced by outside influences. Without complicating pressures, groups communicate and manage the commons among themselves for their mutual benefit, enforcing social norms to preserve the resource and achieve the maximum good for the group, an example of effecting the best case outcome for PD.[44][45]

The prisoner's dilemma as a briefcase exchange

Douglas Hofstadter[46] once suggested that people often find problems such as the PD problem easier to understand when it is illustrated in the form of a simple game, or trade-off. One of several examples he used was "closed bag exchange":

Two people meet and exchange closed bags, with the understanding that one of them contains money, and the other contains a purchase. Either player can choose to honor the deal by putting into his or her bag what he or she agreed, or he or she can defect by handing over an empty bag.

Friend or Foe? is a game show that aired from 2002 to 2003 on the Game Show Network in the US. It is an example of the prisoner's dilemma game tested on real people, but in an artificial setting. On the game show, three pairs of people compete. When a pair is eliminated, they play a game similar to the prisoner's dilemma to determine how the winnings are split. If they both cooperate (Friend), they share the winnings 50–50. If one cooperates and the other defects (Foe), the defector gets all the winnings and the cooperator gets nothing. If both defect, both leave with nothing. Notice that the reward matrix is slightly different from the standard one given above, as the rewards for the "both defect" and the "cooperate while the opponent defects" cases are identical. This makes the "both defect" case a weak equilibrium, compared with being a strict equilibrium in the standard prisoner's dilemma. If a contestant knows that their opponent is going to vote "Foe", then their own choice does not affect their own winnings. In a specific sense, Friend or Foe has a rewards model between prisoner's dilemma and the game of Chicken.

The rewards matrix is

This payoff matrix has also been used on the British television programmes Trust Me, Shafted, The Bank Job and Golden Balls, and on the American game shows Take It All, as well as for the winning couple on the Reality Show shows Bachelor Pad and Love Island. Game data from the Golden Balls series has been analyzed by a team of economists, who found that cooperation was "surprisingly high" for amounts of money that would seem consequential in the real world but were comparatively low in the context of the game.[47]

Researchers from the University of Lausanne and the University of Edinburgh have suggested that the "Iterated Snowdrift Game" may more closely reflect real-world social situations. Although this model is actually a chicken game, it will be described here. In this model, the risk of being exploited through defection is lower, and individuals always gain from taking the cooperative choice. The snowdrift game imagines two drivers who are stuck on opposite sides of a snowdrift, each of whom is given the option of shoveling snow to clear a path, or remaining in their car. A player's highest payoff comes from leaving the opponent to clear all the snow by themselves, but the opponent is still nominally rewarded for their work.

This may better reflect real-world scenarios, the researchers giving the example of two scientists collaborating on a report, both of whom would benefit if the other worked harder. "But when your collaborator doesn't do any work, it's probably better for you to do all the work yourself. You'll still end up with a completed project."[48]

In coordination games, players must coordinate their strategies for a good outcome. An example is two cars that abruptly meet in a blizzard; each must choose whether to swerve left or right. If both swerve left, or both right, the cars do not collide. The local left- and right-hand traffic convention helps to co-ordinate their actions.

Symmetrical co-ordination games include Stag hunt and Bach or Stravinsky.

A more general set of games are asymmetric. As in the prisoner's dilemma, the best outcome is cooperation, and there are motives for defection. Unlike the symmetric prisoner's dilemma, though, one player has more to lose and/or more to gain than the other. Some such games have been described as a prisoner's dilemma in which one prisoner has an alibi, whence the term "alibi game".[49]

In experiments, players getting unequal payoffs in repeated games may seek to maximize profits, but only under the condition that both players receive equal payoffs; this may lead to a stable equilibrium strategy in which the disadvantaged player defects every X games, while the other always co-operates. Such behaviour may depend on the experiment's social norms around fairness.[50]

It is not only prisoners who face dilemmas. Guardians also confront situations in which there are only unattractive choices from which to choose. Examples can easily be found in cases where one agent must smooth tensions between its own partners: one can think of two colleagues jockeying for career advancement and the troubles this causes their company's managing director; two officials competing for promotion and the tension this causes for the head of their bureau; or in parenting when two siblings vie for attention and the anxiety this causes their parents. If the behaviour of the guardian satisfies one side, the other side feels exposed and alienated.

From an international relations perspective, Dr Spyros Katsoulas introduces the concept of the guardian's dilemma.[51] The guardian's dilemma is defined as the condition in which two states maintain their enmity towards one another despite sharing a stronger common ally. By default, a dilemma is a situation with unsatisfactory choices. The guardian's dilemma lies in the fact that the stronger state can neither stay out of a crisis between its allies nor get actively involved without affecting the fragile equilibrium. If the guardian abstains, the situation may spin out of control; if the guardian gets involved, any tilt against one side may be seen as a victory or a window of opportunity for the other. Expanding on Glenn Snyder's concept of the alliance security dilemma,[52] the outcomes of the interaction between the guardian and the two smaller partners are described as abandonment, entrapment, and emboldening.