Optimal policies for the Prisoner's Dilemma.

An optimal model for the Prisoner’s Dilemma game is suggested. The model is normative in the sense that given few assumptions about the way the game is perceived by the players, an optimal policy is prescribed to each player maximizing his long-run expected gain. The dilemma is “resolved” by restructuring the game as a supergame composed of several component games such that transitions among them are possible. Dynamic programming is used to derive the optimal policy.