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Vladimir_Nesov comments on Open Thread: June 2010 - Less Wrong
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The theory says to defect in the iterated dilemma as well (under some assumptions).
Here's what the theory actually says: if you know the number of iterations exactly, it's a Nash equilibrium for both to defect on all iterations. But if you know the chance that this iteration will be the last, and this chance isn't too high (e.g. below 1/3, can't be bothered to give an exact value right now), it's a Nash equilibrium for both to cooperate as long as the opponent has cooperated on previous iterations.