[I realize that I missed the train and probably very few people will read this, but here goes]
So in non-iterated prisoner's dilemma, defect is a dominant strategy. No matter what the opponent is doing, defecting will always give you the best possible outcome. In iterated prisoner's dilemma, there is no longer a dominant strategy. If my opponent is playing Tit-for-Tat, I get the best outcome by cooperating in all rounds but the last. If my opponent ignores what I do, I get the best outcome by always defecting. It is true that all defects is the unique Nash equilibrium strategy, but this is a much weaker reason for playing it, especially given that evidence shows that when playing among people who are trying to win, Tit-for-Tat tends to achieve much better outcomes.
There seems to be a lot of discussion in the comments about this or that being the rational thing to do, and I think that this is a big problem that gets in the way of clear thinking about the issue. The problem is that people are using the word "rational" here without having a clear idea as to what exactly that means. Sure, it's the thing that wins, but wins when? Provably, there is no single strategy that achieves the best possible outcome against all possible implementations of Clippy. So what do you mean? Are you trying to optimize your expected utility under a Kolmogorov prior? If so how come nobody seems to be trying to do computations of the posterior distribution? Or discussing exactly what side data we know about the issue that might inform this probability computation? Or even wondering which universal Turing machine we are using to define our prior? Unless you want to give a more concrete definition of what you mean by "rational" in this context, perhaps you should stop arguing for a moment about what the rational thing to do is.
Followup to: The True Prisoner's Dilemma
For everyone who thought that the rational choice in yesterday's True Prisoner's Dilemma was to defect, a follow-up dilemma:
Suppose that the dilemma was not one-shot, but was rather to be repeated exactly 100 times, where for each round, the payoff matrix looks like this:
As most of you probably know, the king of the classical iterated Prisoner's Dilemma is Tit for Tat, which cooperates on the first round, and on succeeding rounds does whatever its opponent did last time. But what most of you may not realize, is that, if you know when the iteration will stop, Tit for Tat is - according to classical game theory - irrational.
Why? Consider the 100th round. On the 100th round, there will be no future iterations, no chance to retaliate against the other player for defection. Both of you know this, so the game reduces to the one-shot Prisoner's Dilemma. Since you are both classical game theorists, you both defect.
Now consider the 99th round. Both of you know that you will both defect in the 100th round, regardless of what either of you do in the 99th round. So you both know that your future payoff doesn't depend on your current action, only your current payoff. You are both classical game theorists. So you both defect.
Now consider the 98th round...
With humanity and the Paperclipper facing 100 rounds of the iterated Prisoner's Dilemma, do you really truly think that the rational thing for both parties to do, is steadily defect against each other for the next 100 rounds?