Game Theory Explains Healthcare Debate

Good analysis and explains why tit-for-tat is an unbeatable strategy.

There's been a lot of analysis of this, and it turns out that honesty isn't the best policy. One guy decided to run a computer tournament; people were permitted to create algorithms in a synthetic language which would have the ability to keep track of previous exchanges and make a decision on each new exchange whether to be honest or to cheat. He challenged them to see who could come up with the one which did the best in a long series of matches against various opponents. It turned out that the best anyone could find, and the best anyone has ever found, was known as "Tit-for-tat".

On the first round, it plays fair. On each successive round, it does to the other guy what he did the last time.

When Tit-for-tat plays against itself, it plays fair for the entire game and maximizes output. When it plays against anyone who tosses in some cheating, it punishes it by cheating back and reduces the other guys unfair winnings.
No-one has ever found a way of defeating it.

Read the whole thing for the healthcare analysis. Very good.