Good Strategies for the Iterated Prisoner's Dilemma : Smale vs. Markov

TL;DR

This paper compares Smale's average-based strategies and Markov memory-one strategies in the Iterated Prisoner's Dilemma, analyzing their effectiveness in ensuring cooperation and establishing Nash equilibria.

Contribution

It introduces a comparison of two strategy classes, proves a Folk Theorem analogue for Smale strategies, and examines their dynamics against each other.

Findings

Smale strategies can enforce cooperation similar to Markov strategies.

A version of the Folk Theorem is established for Smale strategies.

Dynamics of Smale strategies against each other are analyzed.

Abstract

In 1980 Steven Smale introduced a class of strategies for the Iterated Prisoner's Dilemma which used as data the running average of the previous payoff pairs. This approach is quite different from the Markov chain approach, common before and since, which used as data the outcome of the just previous play, the memory-one strategies. Our purpose here is to compare these two approaches focusing upon good strategies which, when used by a player, assure that the only way an opponent can obtain at least the cooperative payoff is to behave so that both players receive the cooperative payoff. In addition, we prove a version for the Smale approach of the so-called Folk Theorem concerning the existence of Nash equilibria in repeated play. We also consider the dynamics when certain simple Smale strategies are played against one another.