Game Theory, Part 3 — You are the average of the five people you spend the most time with

This article will explore how Game Theory illustrates the popular saying, “You are the average of the five people you spend the most time with.” Through examples from the Iterated Prisoner’s Dilemma game, we can see how individual behavior and outcomes are shaped by the surrounding strategies — whether cooperative or not— of those in the same environment.

I discussed the Prisoner’s Dilemma Problem and Iterated Prisoner’s Dilemma games in the first two articles on the game theory series. This article is Part 3 of my game theory series, so if you haven’t read the first two articles, I recommend checking them out first.

Part 1 discusses the classic Prisoner’s Dilemma Problem and highlights Game Theory’s relevance in many real-world scenarios. Part 2 describes the Iterated Prisoner’s Dilemma game with the help of an example where Kratika and Ishita, the CEOs of two competing food delivery platforms, try different strategies to compete. It also discusses Robert Axelrod’s famous tournament, which revealed that the most successful strategies share key traits: they are “nice” (starting with cooperation), forgiving (but not overly…