repeated game

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A game that is repeated a number of times into the future. The number of repetitions may be finite or infinite. The number may be known in advance, or there may be an expectation that the game will be repeated. Participants in repeated games have an incentive to choose their strategies taking into account how their actions in each play of the game will affect their reputation, that is, how other participants will expect them to behave in future rounds of the game. It may thus pay in a repeated game to adopt strategies which would not be chosen in a one-off game, where reputation does not matter. In any game that is repeated a finite number of times backward induction can be used to find the equilibrium strategy: the Nash equilibrium for the one-shot game will be played in every repeat of the game. See also folk theorem.

Subjects: Economics.

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