This blog post is composed as following:

Review of Prisoners Dilemma
Explanation of Game of Chicken by comparing it to Prisoners Dilemma
Blackmail is a Game of Chicken
Why we should care about blackmail/Game of Chicken
What to do? Iterated Game of Chicken?

You are encouraged to skip ahead to the part that interests you

1. Review of Prisoners Dilemma

Prisoners Dilemma is a class of two player games which can represent for example mutual beneficial cooperation, or the tragedy of the commons. I don't think it is controversial to say that this class of games are important in almost any multi-agent scenario.

In a Prisoners Dilemma , each player gets to choose between two actions, usually called "cooperate" and "defect". Further more the payoffs haved to fulfill the following:

Holding my action constant it is better for me if you cooperate.
Holding your action constant, it is better for me if I defect.
Cooperate-cooperate is Pareto optimal (even when including mixed strategies).

Example of a payout matrix for Prisoners Dilemma:

\begin{matrix} c & d c & 1, 1 & - 1, 2 d & 2, - 1 & 0, 0 \end{matrix}

In this particular example, cooperate corresponds to spending one of your own utility to give the other player two utility, and defect corresponds to doing nothing. This can represent a situation with the possibility of mutual benefit from cooperation, but where it is possible to win even more (at the other players expense) by cheating.

But we can also consider a negative game:

\begin{matrix} c & d c & 0, 0 & - 2, 1 d & 1, - 2 & - 1, - 1 \end{matrix}

Here cooperate is doing nothing, while defect corresponds to gaining one utility for yourself while costing the other player two utility. This can represent burning the commons (if the players defect) or not (if they cooperate).

2. Explanation of Game of Chicken by comparing it to Prisoners Dilemma

Just like Prisoners Dilemma, Game of Chicken is a two player game, where each player can choose between two actions. These actions are typically called "swerve" and "straight", but in this blog post I will instead call the two actions "cooperate" and "defect" as to more easily compare with Prisoners Dilemma.

Also the same as Prisoners Dilemma: In Game of Chicken, I get the best payout if I defect and you cooperate (and vice versa). The difference is that conditional on you defecting, it is better for me if i cooperate.

A two action, two player game is a Game of Chicken if:

Holding my ac

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