Axelrod's Tournament

In 1980, Robert Axelrod, professor of political science at the University of Michigan, held a tournament of various strategies for the prisoner's dilemma. He invited a number of well-known game theorists to submit strategies to be run by computers. In the tournament, programs played games against each other and themselves repeatedly. Each strategy specified whether to cooperate or defect based on the previous moves of both the strategy and its opponent.

Some of the strategies submitted were:

Always defect: This strategy defects on every turn. This is what game theory advocates. It is the safest strategy since it cannot be taken advantage of. However, it misses the chance to gain larger payoffs by cooperating with an opponent who is ready to cooperate.
Always cooperate: This strategy does very well when matched against itself. However, if the opponent chooses to defect, then this strategy will do badly.
Random: The strategy cooperates 50% of the time.

All of these strategies are prescribed in advance. Therefore, they cannot take advantage of knowing the opponent's previous moves and figuring out its strategy.

The winner of Axelrod's tournament was the TIT FOR TAT strategy. The strategy cooperates on the first move, and then does whatever its opponent has done on the previous move. Thus, when matched against the all-defect strategy, TIT FOR TAT strategy always defects after the first move. When matched against the all-cooperate strategy, TIT FOR TAT always cooperates. This strategy has the benefit of both cooperating with a friendly opponent, getting the full benefits of cooperation, and of defecting when matched against an opponent who defects. When matched against itself, the TIT FOR TAT strategy always cooperates.

Several variations to TIT FOR TAT have been proposed. TIT FOR TWO TATS is a forgiving strategy that defects only when the opponent has defected twice in a row. TWO TITS FOR TAT, on the other hand, is a strategy that punishes every defection with two of its own.

TIT FOR TAT relies on the assumption that its opponent is trying to maximize his score. When paired with a mindless strategy like RANDOM, TIT FOR TAT sinks to its opponent's level. For that reason, TIT FOR TAT cannot be called a "best" strategy.

It must be realized that there really is no "best" strategy for prisoner's dilemma. Each individual strategy will work best when matched against a "worse" strategy. In order to win, a player must figure out his opponent's strategy and then pick a strategy that is best suited for the situation.