I'm not sure it's really more counterintuitive that (known) ability to predict can be a disadvantage than it is that (known) having more options can be a disadvantage.
I wonder if it might be fruitful to think generally about decision theories in terms of their ability to rule out suboptimal decisions, as opposed to their ability to select the optimal decision.
I also wanted you to read something I wrote below:
When described in this way, I am reminded that I would be very interested to see this sort of problem examined in the modal agents framework. I have to flag that I lack a technical understanding of this sort of thing, but it seems like we can imagine the agents as formal systems, with B stronger than A, and A forcing B to prove that A defects by making it provable in A that A defects, and since B is stronger than A, it is also provable in B that A defects.
Also, there are variants with imperfect predictors:
It can be shown that A behaves precisely as an agent would if it cooperates with an arbitrary agent C if P(C predicts A defects | A defects) is less than 0.5, is indifferent if that probability equals 0.5, and defects if that probability is greater than 0.5.
Suppose that B's predictive accuracy is greater than 50 percent. Then the expected utility of A defecting is 2p + 0(1 - p), and the expected utility of A cooperating is 1p + 1(1 - p), and the expected utility of defection is greater than that of cooperation. Plug in numbers if you need to. There are similar proofs that if B's predictions are random, then A is indifferent, and if B's predictive ability is less than 50 percent, then A cooperates.
I don't know enough math and I don't know if this is important, but in the hopes that it helps someone figure something out that they otherwise might not, I'm posting it.
In Soares & Fallenstein (2015), the authors describe the following problem:
More precisely: two agents A and B must choose integers m and n with 0 ≤ m, n ≤ 10, and if m + n ≤ 10, then A receives a payoff of m dollars and B receives a payoff of n dollars, and if m + n > 10, then each agent receives a payoff of zero dollars. B has perfect predictive accuracy and A knows that B has perfect predictive accuracy.
Consider a variant of the aforementioned decision problem in which the same two agents A and B must choose integers m and n with 0 ≤ m, n ≤ 3; if m + n ≤ 3, then {A, B} receives a payoff of {m, n} dollars; if m + n > 3, then {A, B} receives a payoff of zero dollars. This variant is similar to a variant of the Prisoner's Dilemma with a slightly modified payoff matrix:
Likewise, A reasons as follows:
And B:
I figure it's good to have multiple takes on a problem if possible, and that this particular take might be especially valuable, what with all of the attention that seems to get put on the Prisoner's Dilemma and its variants.