Extortion can Outperform Generosity in the Iterated Prisoners’ Dilemma

Assistant Professor of Economics, School of Economics and Management, Tsinghua University

Visiting Scholar, Department of Economics, The Chinese University of Hong Kong (2015.9-2016.3)

Prof. Jie Zheng's CV

Zero-determinant (ZD) strategies, as discovered by Press and Dyson, can enforce a linear relationship between a pair of players’ scores in the iterated Prisoner’s Dilemma. Particularly, the Extortionate ZD strategies can enforce and exploit cooperation, providing a player with a score advantage, and consequently higher scores than those from either mutual cooperation or Generous ZD strategies. In laboratory experiments in which human subjects were paired with computer co-players, we demonstrate that both the Generous and the Extortionate ZD strategies indeed enforce a unilateral control of the reward. When the experimental setting is sufficiently long and the computerized nature of the opponent is known to human subjects, the Extortionate strategy outperforms the Generous strategy. Human subjects’ cooperation rates when playing against Extortionate and Generous ZD strategies are similar after learning has occurred. More than half of Extortionate strategists finally obtain an average score higher than that from mutual cooperation.