Lesson 1
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We discuss repeated games, aiming to unpack the intuition that the promise of rewards and the threat of punishment in the future of a relationship can provide incentives for good behavior today. In class, we play prisoners' dilemma twice and three times, but this fails to sustain cooperation. But it is possible to sustain good behavior in early stages of some repeated games provided the stage games have two or more equilibria to be used as rewards and punishments. This may require us to play bad equilibria tomorrow. Finally, we play a game in which the players do not know when the game will end, and we start to consider strategies for this potentially infinitely repeated game. Polak, Ben. ECON 159, Game Theory, Fall 2007. Yale OpenCourseWare: Economics, Accessed 03/10/14 http://oyc.yale.edu/economics/econ-159/lecture-21 License: Creative Commons BY-NC-SA

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