The social implications of nonzero-sum games

It is argued that a reorientation of the theory and application of nonzero-sum (NZS) games is needed in order for that discipline to have a beneficial impact on societal problems such as war. Accordingly, a general strategy of cooperation with minimum sanctions (CMS) is developed and applied to prisoner's dilemma (PD) and dollar auction games. It is shown that tit-for-tat-like strategies are appropriate for all PD games, not just iterated PD, and that, contrary to previous consensus, it is rational to cooperate in the single-shot PD. In evaluating NZS strategies in human or computerized tournaments, special NZS scoring rules should be used. A water-division bargaining example is included to illustrate the superiority of the maximum-welfare approach to the Nash bargaining solution.>