Is it Always Efficient to be Nice? A Computer Simulation of Axelrod’s Computer Tournament

The simplest model of a conflict between two parties is a 2 × 2 game. Each player has two strategies, say c (to cooperate) and d (to defect). If one takes only the rank order of the payoffs into account there are 78 nonequivalent 2 × 2 games (Rapoport, Guyer, Gordon 1976). The most extensively analysed of these 78 is Prisoner’s Dilemma (see Table I). Following the taxonomy of Rapoport (Rapoport et al. 1976) we define a 2 × 2 game as Prisoner’s Dilemma, whenever 1$$T > R > P > S$$ The paradox of Prisoner’s Dilemma is that each player gets — independent from what the other plays — a higher payoff when playing D. To defect is a so called dominant strategy. But when both players act individually rational and chose D both suffer from their individual rationality. Mutual cooperation would be collectively rational. The most outstanding situation which has (on an abstract level) such a structure is the arms race between the two superpowers.