Prisoner's dilemma is fallacious for all practical purposes. It presupposes that both (all) actors are perfectly selfish and therefore sociopathic (aka "perfect" according to Chicago school of economics at least). However, dominant sociopathic tendencies are statistically recorded in only 5-10 % of population, the rest being "abnormal" "sheep" or just plain normal folks who juggle selfishness with genuine altruism. (I guess there is a proportion similar to that of the wolves of "super-sheep" or "martyrs" who are overwhelmingly altruistic but I couldn't find any research on that, I guess self-sacrificing saints are not as interesting as serial killers and sociopaths next door)
Anyways, Game Theory is very interesting and even practically useful but only if you take into account the realities of human animal.

As for flagging... I've done some thought experiments on it and I can't say I've found a truly satisfying solution - IF our goal is a stable, permanent social system (And that is an assumption. It is perfectly possible the original purpose of steemit is to fleece as much as you can and run, a classical pyramid scheme - but not a social space of any permanence). Anyway you turn it, it is introducing weapons into anarchy. Never a good thing unless you're into Mad Max style juvenile dystopian fantasies. Kindergartens function only because children are forbidden from having knives. Primate group dynamics take hold very quickly and Lord of the Flies scenario becomes inevitable. Primates are a nasty animal order in general, better not give them guns if you don't absolutely have to. And if you do, at least give them toy guns.