The original dilemma is one-shot, but you're right: in the iterated version tit-for-tat is a fairly reliable strategy. I believe Hofstadter talked about it in a Metamagical Themas column.

(Actually, your analysis there suggests a bit of a recursion, a la the surprise-test (or unexpected hanging) paradox (http://plato.stanford.edu/entries/epistemic-paradoxes/). I suppose you can cut it off with a cost-benefit calculation.)

P.S. Thanks for the input!