As we all know, most illustrative game theory exercises are highly simplistic. I should have been more careful in my language choice stating that this was a variation of the classic prisoner's dilemma.

Why this is a master's lesson in strategy is two fold: 1) It cuts to the heart of the matter that all strategy is based on credibility. One would just need to look around at current events to see this play out. 2) It also illustrates that making the punishment guaranteed and removing all doubt of misunderstanding are essential.

Thanks all for the comments. As far as wavesounds, you jump to conclusions.