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Iterated prisoner’s dilemma: Difference between revisions
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This explains why cooperation works as an evolutionary strategy. | This explains why cooperation works as an evolutionary strategy. | ||
===[[Convexity]] and the prisoner’s dilemma=== | |||
The simple imperative of the iterated prisoner’s dilemma is conditioned in an environment with [[convex]] payoffs, however. A reputation for trustworthiness acquired across a large range of small transactions would be inordinately costly to forfeit for the sake of the defector’s reward on a small transaction, but not necessarily on a disproportionately large one. To take an example from eBay: I may have acquired a five-star reputation over 500 transactions having an average value of £10. The outright cost for acquiring that reputation, compared with the defection value of a single transaction is large, but in absolute terms may still be minimal: only the bid-ask spread and the cost of eBay commissions (bear in mind I receive value for the transactions I settled). If, in my one-hundred-and-first transaction, I offer a car for £15,000, the defection reward easily justifies burning my existing transaction reputation, especially since it is trivial to create a new eBay account and start again.<ref>Of course, in real life there are other pressures and incentives at play to prevent me defecting: the criminal law, for one, and any prudent buyer’s circumspection for another. A buyer is unlikely to pay away any money without full legal title to a mechanically sound vehicle that meets the sale description. But, for the purposes of the prisoner’s dilemma [[metaphor]], these “real-world” circumstances are not relevant.</ref> | |||
{{sa}} | {{sa}} | ||
*[[Prisoner’s dilemma]] | *[[Prisoner’s dilemma]] | ||
*[[Agency problem]] | *[[Agency problem]] | ||
{{ref}} | |||