You may want to be more careful about using game theory on real-world problems. Game theory makes a lot of assumptions (some explizit, others implizit) that most of the time are not given in real life.
You will even have a hard time to find good examples for real life prisoners who are in a game theoretic PD. In reality, most of the times the prisoners dilemma looks rather like this:
Same payoff matrix as the classical PD, BUT both prisoners may chose to break their silence any time. Once a prisoner has confessed, there is no more going back to silence. This situation will probably yield cooperation (unless the prisoners cannot get accurate information).
Most real-world situations do neither fit one-shot games nor iterated games. Real life rarely has discrete game turns.
Many real-world situations are about behaviours that have some duration and can be stopped/changed.
Many real- life situations permit/enable the player to change his decision from cooperation to defection if he learns about the defection of the other player. In many of these situations the betrayed player is able to change his own action fast enough to deny the defector any advantage from defecting.
Of course, you can still model this with game theory, but you need to break “turns” into smaller units (Planck seconds, if you want to go all the way), as for iteration vs something being a one shot game, you could say either of these is universally the case based on definitions of what is a repetition of the same game, and what is different enough to qualify as a new scenario.
So game theory is not broken for real world problems, but like any theory I have seen when you scale it up from a simple puzzle to interactions with the universe you make the problem more difficult.
You may want to be more careful about using game theory on real-world problems. Game theory makes a lot of assumptions (some explizit, others implizit) that most of the time are not given in real life.
You will even have a hard time to find good examples for real life prisoners who are in a game theoretic PD. In reality, most of the times the prisoners dilemma looks rather like this: Same payoff matrix as the classical PD, BUT both prisoners may chose to break their silence any time. Once a prisoner has confessed, there is no more going back to silence. This situation will probably yield cooperation (unless the prisoners cannot get accurate information).
Most real-world situations do neither fit one-shot games nor iterated games. Real life rarely has discrete game turns.
Many real-world situations are about behaviours that have some duration and can be stopped/changed.
Many real- life situations permit/enable the player to change his decision from cooperation to defection if he learns about the defection of the other player. In many of these situations the betrayed player is able to change his own action fast enough to deny the defector any advantage from defecting.
Of course, you can still model this with game theory, but you need to break “turns” into smaller units (Planck seconds, if you want to go all the way), as for iteration vs something being a one shot game, you could say either of these is universally the case based on definitions of what is a repetition of the same game, and what is different enough to qualify as a new scenario.
So game theory is not broken for real world problems, but like any theory I have seen when you scale it up from a simple puzzle to interactions with the universe you make the problem more difficult.