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“There is no such thing as societies, only individuals and their families,” said former British Prime Minister Margaret Thatcher. Most social scientists would disagree; for them the importance of the myriad ways people come together in society is obvious. (One type of way, incidentally, is through families.) In any practical discussion of economic policy, social institutions are likely to play a significant role. Whether the groups in question are religious denominations, unions, human rights or environmental advocacy organizations or some other group of people with a purpose, their impact has to be taken into account.
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Strictly speaking, there should be more than two time periods, and players should not be certain which one will be the last. If they were sure that period t was the end of the sequence, they would choose to defect then for the reasons laid out in the analysis of the one-period game. Expecting certain defection in the last round, they would also defect in the next-to-last round, and so on right back to the beginning. This type of logic is called “backward induction”; it is common in the mathematical analysis of sequences and chains. Fortunately, most real-world repeated games are of uncertain duration, so backward induction does not apply in this strict manner.
Identifying cooperation with tit for tat has become standard among game theorists, since it greatly simplifies the analysis of cooperation problems. This is also the reason I am adopting it here. In the example we are looking at, little is lost and much is gained by assuming that responses of cooperators to the other player’s C and D are so cut-and-dried. Nevertheless, some care should be taken. There do exist problems for which the results obtained by analyzing tit for tat cannot be generalized to other cooperative strategies.
- Civil Society
- Springer Berlin Heidelberg
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