What Game Theory shows us about the game of life

Ever found yourself in a situation where you know working together would be best, but you’re not sure if you can trust the other person? Or maybe you’ve wondered if being a bit ruthless is the only way to get ahead? Turns out, there’s a whole field of study for that, and it’s called game theory.

The famous example most of us have heard of is called the Prisoner’s Dilemma:

Imagine two partners in crime get nabbed. The cops offer each a deal: snitch on your buddy, and you walk free while they get a long sentence. If you both stay silent, you both get a short sentence. But if you both snitch, you both get a medium sentence. What do you do? Acting purely in your own self-interest (snitching to walk free) can actually lead to a worse outcome for both of you if your partner does the same. We’ve seen this play out on a massive scale too, like the nuclear arms race – a high-stakes game where nobody really “won.”

But here’s where it gets interesting. Life isn’t usually a one-shot deal. We interact with the same people over and over. Think about animals grooming each other – that’s a repeated game. And when the game is repeated, the best strategy can change dramatically.

In the video from Veritasium (see https://www.youtube.com/watch?v=mScpHTIi-kM&ab_channel=Veritasium), Political scientist Robert Axelrod actually put this to the test with computer tournaments. He invited people to submit strategies for the repeated Prisoner’s Dilemma. And the winner? A surprisingly simple strategy called “Tit for Tat”. It starts by cooperating and then just does whatever the other player did in the last round.

Axelrod found that the most successful strategies shared a few key traits:

• Be Nice: Don’t be the first one to stab someone in the back (or, in game theory terms, defect).
• Retaliate (but be Forgiving): If someone defects, you hit back. But don’t hold a grudge forever. If they start cooperating again, you should too.
• Be Clear: Your strategy shouldn’t be a mystery. Make it easy for others to understand how you’ll behave.

Interestingly, knowing when the “game” ends changes everything. If everyone knows it’s the last round, the incentive to defect goes way up. That’s why, in the second tournament, an unknown number of rounds actually helped increased cooperation (which is closer to how people live their lifes).

What’s really hopeful is that even in a world full of so called ‘bad actors’, even a small group of cooperators using a strategy like Tit for Tat can actually do pretty well and even encourage others to cooperate over time due to other people trying to emulate the success of the small group and eventually becoming the dominant group.

Of course, life isn’t perfect. Sometimes mistakes happen and so if someone defects by accident, a strict Tit for Tat can get stuck in a cycle of retaliation. So, a slightly more forgiving version, maybe one that forgives a defection occasionally, can actually do better to account for variations in real life.

In the end, many situations in life aren’t about one person winning and the other losing (basically a “zero-sum game”). Often times, cooperation will lead to a win-win situation, just take note to not be a pushover.

Thanks to Veritasium for the video on Youtube. Always a pleasure to watch your videos.