AP MicroeconomicsGame Theory & Information
Tit-for-Tat
Tit-for-tat is a repeated-game strategy that cooperates on the first move, then simply copies whatever the opponent did last round.
In the iterated prisoner's dilemma, tit-for-tat starts nice, retaliates immediately against defection, but forgives once the opponent cooperates again. It famously won Robert Axelrod's tournaments by being nice, retaliatory, forgiving, and clear. It shows how cooperation can be sustained between self-interested players when they interact repeatedly, underpinning tacit collusion among oligopolists.