I think understanding basic game theory concepts like the prisoner's dilemma is really useful, but it leaves at least two important concepts out:
1. Reputation
2. Context Dependence.
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The gist of the prisoner's dilemma that [[Robert Axelrod]] showed was that by getting people to engage in iterated prisoner's dilemmas instead of one off, you promote cooperative
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(If you're unfamiliar with the example, I wrote a short explanation) behavior.
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If I am just going to do business with you once, then I am most inclined to just maximize the value for that transaction.
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If I know we are going to work together for a long time, then even the completely selfish play is to cooperate and focus on maximizing the lifetime value of our interactions even if it's not the best for me in each iteration.
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This is a really helpful model, but I think still understates the value of a tit-fot-tat pro-social strategy because it ignores reputational benefits.
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Warren Buffett gets access to great opportunities even with people he has never done business with because he has a reputation for cooperating and being a good actor.
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Replying to
Axelrod’s second book, the complexity of cooperation, covers many such nuances.
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