Tit For Tat

What is 'Tit For Tat'

Tit for tat is a game-theory mechanism which is subject to a payoff matrix similar to that of a prisoner's dilemma. Tit for tat was introduced by Robert Axelrod, who developed a strategy where each participant in an iterated prisoner's dilemma will follow a course of action which is consistent with their opponent's previous turn. For example, if provoked, a player will subsequently respond with retaliation, but if they are not provoked, the player will subsequently cooperate.

BREAKING DOWN 'Tit For Tat'

Tit-for-tat strategies are based on the concepts of retaliation and altruism. When faced with a prisoner's dilemma-like scenario, an individual will cooperate when the other member has an immediate history of cooperating and will default when the counterparty previously defaulted.
This concept is often applied to economics and biology.

RELATED TERMS
  1. Iterated Prisoner's Dilemma

    A normal prisoner's dilemma played repeatedly by the same participants. ...
  2. Diner's Dilemma

    A game-theory situation with several players. Similar to a prisoner's ...
  3. Prisoner's Dilemma

    A paradox in decision analysis in which two individuals acting ...
  4. Dollar Auction

    The basic dollar auction is based on the auction of a $1 bill ...
  5. Centipede Game

    An extensive-form game in game theory in which two players alternately ...
  6. Financial Cooperative

    A financial institution that is owned and operated by its members. ...
Related Articles
  1. Economics

    Utilizing Prisoner’s Dilemma In Business And The Economy

    The Prisoner’s Dilemma, one of the most famous game theories, provides a framework for understanding how to strike a balance between cooperation and competition, and is a very useful tool for ...
  2. Fundamental Analysis

    The Business Model Of Private Prisons

    How does the business model of private prisons work?
  3. Economics

    Advanced Game Theory Strategies For Decision-Making

    The importance of game theory to modern analysis and decision-making can be gauged by the fact that since 1970, as many as 12 leading economists and scientists have been awarded the Nobel Prize ...
  4. Economics

    Prisoner's Dilemma

    Learn more about this classic game theory scenario.
  5. Professionals

    Oligopolies

    Oligopolies. Learn about the oligopoly, how they are created and how its members interact with one another in the market.
  6. Investing News

    Showtime's "Billions" Explained

    The genesis and the real-life inspirations for Showtime's breakout success "Billions." Even the actors really did their homework.
  7. Investing

    3 Reasons Why Countries Devalue Their Currency

    Ever since world currencies abandoned the gold standard and allowed their exchange rates to float freely against each other, there have been many currency devaluation events that have hurt not ...
  8. Investing

    The Science of Making Better Investment Decisions

    Neuroeconomics attempts to bridge neuroscience, cognitive psychology and economics in order to understand the mechanisms underlying economic decision making.
  9. Options & Futures

    Game Theory: Beyond The Basics

    Take your game theory knowledge to the next level by learning about simultaneous games and the Nash Equilibrium.
  10. Personal Finance

    Myanmar

    If you're looking for an affordable trip this year, these are your best bets.
RELATED FAQS
  1. How is game theory related to the Nash equilibrium?

    Learn how Nash's equilibrium is an important concept in game theory, and understand how it applies to the common prisoner's ... Read Answer >>
  2. What does the Nash equilibrium predict?

    Learn more about the famous Nash equilibrium, which is the revolutionary concept in game theory about the economics of human ... Read Answer >>
  3. What should a whistleblower do if their employer retaliates?

    Learn what a whistleblower can do in case his employer retaliates, such as filing a complaint within an organization or the ... Read Answer >>
  4. What is the difference between a dominant strategy solution and a Nash equilibrium ...

    Dive into game theory and the Nash equilibrium, and learn why the Nash equilibrium assumptions about information are less ... Read Answer >>
  5. Why is Game Theory useful in business?

    Game theory was once hailed as a revolutionary interdisciplinary phenomenon bringing together psychology, mathematics, philosophy ... Read Answer >>
  6. How do companies with a large product portfolio use BCG Analysis?

    Understand what BCG analysis is, and learn how companies use the BCG Matrix to analyze the performance of their product portfolios. Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center