Repeated Games & Reputation

Overview

When parties repeat — or third parties observe — defection costs tomorrow's cooperation, flipping the Prisoner's Dilemma. Axelrod's 1979–1981 tournaments proved cooperation wins empirically; the Folk Theorem (Fudenberg & Maskin 1986) proved it mathematically. This skill diagnoses when cooperation is sustainable (discount factor check), selects the right strategy (TFT vs Generous TFT vs Pavlov), and engineers reputation infrastructure for markets where parties don't repeat directly. Composes with prisoners-dilemma · second-order-thinking · signaling-games.

When to Use

Apply when:

• A relationship is expected to continue between the same parties (supplier-buyer, employer-employee, GP-LP, founder-investor, customer-platform)
• Even in a one-shot direct interaction, third parties observe the move and adjust their willingness to play with you
• You're designing a platform or marketplace that needs strangers to cooperate — reputation infrastructure is the architectural question
• You're trying to escape a defection trap and the candidate escape is "repetition" or "reputation"
• A partnership keeps fragmenting — diagnose whether δ is too low or observation is broken
• Trust/safety reputation is shaping who wins AI adoption and AI-native competition — where capability converges, a bad launch or safety incident reprices every future round of enterprise adoption (and the AI capex supercycle only lengthens the shadow of the future)