My example was extreme to point out its flaws. Even reasonable players will give themselves an edge (even a slight one) when given the opportunity.
No, they won't, if they're engaging with teh game the way it exhorts them to engage with it. It presents a player agenda and principles for a reason. If your players can't bring themselves to be honest brokers in creating an engaging and dramatic narrative with each other and the GM, don't play this game.
I don't think the proposition is that it happens in "every room". It is a tool, like any other, that the GM can leverage to engage players and fill in the world and maybe give themselves some breathing room.
Must be harvest season from the amount of straw men being constructed in this thread.