Extortion and cooperation in repeated games

Social dilemmas are situations in which individuals have an incentive to defect at the expense of other group members. Fortunately, when such situations occur repeatedly, reciprocal strategies like Tit-for-Tat can resolve the social dilemma. However, William Press and Freeman Dyson, a computer scientist and a theoretical physicist, have recently shown that repeated interactions also allow individuals to extort their peers. Using an extortionate strategy, an individual can force the co-player to cooperate, although the individual itself is not fully cooperative. In my talk, I will explain how these strategies work, and I will review recent theoretical and experimental results on when extortion pays. In the end of my talk, I will also briefly discuss the impact of a player's memory on the prospects of cooperation in repeated games.