I think the flaws in the thinking with these studies that try to test altruism, and other "odd" behaviours according to Game Theory is that we've become so far removed from where these behaviours originally evolved.

The aberration is that we live in densely populated areas where selfishness is a possible behaviour.

Our social-limit is estimated at around 500 people. Surnames developed around the 13th century in Britain, before that it was patronyms meaning we could recognise people via association. This is still common in rural areas, my wife's grandfather likes to travel to car shows, he's told people down in the US to just ask for him by name. He lives in a rural part of Canada and sure enough, people will reach him because everyone knows him.

Altruism works, because for the majority of human history the people you chose to help or not to help were also the people who would sooner or later face the same decision. One instance of uncooperative behaviour would render you persona non grata. Your neighbour needs help thatching his roof after a storm, do you help? Game Theory keeps saying "no, because you could steal his land!" reality says "yes, because if he doesn't die from exposure, which he most likely won't, then he won't help you round up your goats when your fence breaks and they'll eat all your crops and you'll likely starve to death in the winter".

The simple fact is most people are willing to do "favours" with no questions asked, and with no expectation of payment except "being owed one". The classic is helping a friend move. There's absolutely no reason to help someone move, until you need to so you earn the help in advance, and when someone breaks the trust the response is normally "I'm never helping that asshole again."

Thank you for your interesting comment.

May I ask for your definition of altruism?

Helping someone else, in part because you recognize that you may someday need his/her help, seems like rational egoism to me.

And even if I thought I would never see someone again, I might help them if I thought they were virtuous, simply because I think virtue should be recognized and rewarded.

Game theory is ultimately a drastic oversimplification (a model) of human agency. It happens to coincide with certain popular simplifications nicely, but ultimately it's flawed. In situations where it tries to prove either cooperation or competition is the superior behavior it often sets up its actors in such a way that it begs the question (the answer is baked into how the variables are set up and how the agents are made to optimize those variables). I wouldn't take it too seriously as an authority on ethical questions. It's most useful as a model to reason about average outcomes in a limited set of situations. It tends to get into trouble elsewhere [1]

[1]: http://www.amazon.com/The-Misbehavior-Markets-Financial-Turb...

I think you may be missing an aspect of this. The original result in game theory, implied that systems can be globally cooperative with selfish individuals. This has been used to justify Capitalism, much like the concept of evolution within social darwinism. If systems can be globally cooperative with selfish individuals, then we as individuals are doing our duty by being selfish. This is why a highly technical result within mathematics is so widely celebrated. This counter result undermines the first result - granted the first has been taken wholly out of context, but hopefully so will the second. But I'm not holding my breath...

Cancerous cells flourish as well.

That only works in situations with very strong group selection. See The Tradgedy of Group Selectionism: http://lesswrong.com/lw/kw/the_tragedy_of_group_selectionism...