What is 'Tit For Tat'

Tit for tat is a game-theory mechanism subject to a payoff matrix similar to that of a prisoner's dilemma. Tit for tat was introduced by Anatol Rapoport, who developed a strategy in which each participant in an iterated prisoner's dilemma follows a course of action consistent with his opponent's previous turn. For example, if provoked, a player subsequently responds with retaliation; if unprovoked, the player cooperates.

BREAKING DOWN 'Tit For Tat'

Tit for tat is a strategy that can be implemented in games with repeated moves or in a series of similar games. The concept revolves around game theory, an economic framework that explains how humans interact with each other in competitive environments. There are two types of game theory: cooperative game theory and uncooperative game theory.

Tit for tat posits that a person is more successful if he cooperates with another person. Implementing a tit for tat strategy occurs when one agent cooperates with another agent in the very first interaction and then mimics their subsequent moves. This strategy is based on the concepts of retaliation and altruism. When faced with a dilemma, an individual cooperates when another member has an immediate history of cooperating and defaults when the counterparty previously defaulted.

Prisoner's Dilemma and the Use of a Tit for Tat Strategy

The prisoner's dilemma is a famous economic scenario used to explain the field of social science. It helps show people the balance between cooperation and competition in business, politics, and general social settings. In the traditional version of the game, two individuals are arrested and presented with a dilemma. If both confess, they each serve five years in jail. If Prisoner 1 confesses and Prisoner 2 does not, Prisoner 2 serves seven years and Prisoner 1 goes free. If both agents do not confess, they each serve three years. The tit for tat strategy is to start with cooperation and not confess, assuming the other agent follows suit.

For example, two competing economies can use a tit for tat strategy so that both parties benefit. One economy starts with cooperation by not imposing import tariffs on the other economy's goods and services to induce good behavior. The idea is the second economy responds by also choosing not to impose import tariffs. If the second economy reacts by implementing tariffs, the first economy retaliates by implementing tariffs of its own to discourage the behavior.

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