torekp comments on Diplomacy as a Game Theory Laboratory - Less Wrong
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Diplomacy rant/warning!
Diplomacy culture is different in different cultures. The exchange between Eero Tuovinen and Valamir (Ralph) in this thread is particularly fascinating, and brings up a very good point: the game of Diplomacy is defined by the people agreeing to play it. If you do not agree beforehand what is within the game then you are playing different games, which is a very weird situation. "Let's play a game!" "Okay, e4." "Um, I rolled doubles so I go again. What's this about pawns?"
If you do agree beforehand, then you're all playing the same game. But two groups could easily choose different games and still call them both "Diplomacy"... here's Valamir's chosen game:
whereas here's Eero's chosen game:
These are different games. Eero claims the second is a better game qua game. I tend to believe him. If during the same "game" one person thinks they're playing Valamir's and one Eero's, it's no wonder dysfunction results.
This point about Diplomacy culture illustrates one of the most important ways in which it's not particularly true that
as stated in the OP (emphases added). The players aren't self-interested because, in the usual case, they're playing with friends and acquaintances. (Or even simply because they're typical human beings interacting with other human beings.) And the availability of external enforcement mechanisms has already been pointed out.
Of course, game theory doesn't actually require self-interested actors either. At least not in any sense of "rational self-interest" which goes beyond "rational interest" or, for brevity, "rationality".