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ECON 159: Game Theory

Lecture 21 - Repeated Games: Cooperation vs. the End Game. 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 prisoner's dilemma twice and three times, but this fails to sustain cooperation. The problem is that, in the last stage, since there is then is future, there is no incentive to cooperate, and hence the incentives unravel from the back. We related this to the real-world problems of a lame duck leader and of maintaining incentives for those close to retirement. But it is possible to sustain good behavior in early stages of some repeated games (even if they are only played a few times) 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. We relate this to the trade off between ex ante and ex post efficiency in the law. 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. (from oyc.yale.edu)

Lecture 21 - Repeated Games: Cooperation vs. the End Game

Time Lecture Chapters
[00:00:00] 1. Repeated Interaction: Cooperation vs. Defection in the Prisoner's Dilemma
[00:16:40] 2. Repeated Interaction: The Breakdown of Cooperation and The Lame Duck Effect
[00:22:44] 3. Repeated Interaction: Renegotiation
[00:48:31] 4. Failure of Renegotiation: Bankruptcy Laws
[00:53:17] 5. Repeated Interaction: The Grim Trigger Strategy

References
Lecture 21 - Repeated Games: Cooperation vs. the End Game
Instructor: Professor Ben Polak. Resources: Blackboard Notes Lecture 21 [PDF]. Transcript [html]. Audio [mp3]. Download Video [mov].

Go to the Course Home or watch other lectures:

Lecture 01 - Introduction: Five First Lessons
Lecture 02 - Putting Yourselves into Other People's Shoes
Lecture 03 - Iterative Deletion and the Median-Voter Theorem
Lecture 04 - Best Responses in Soccer and Business Partnerships
Lecture 05 - Nash Equilibrium: Bad Fashion and Bank Runs
Lecture 06 - Nash Equilibrium: Dating and Cournot
Lecture 07 - Nash Equilibrium: Shopping, Standing and Voting on a Line
Lecture 08 - Nash Equilibrium: Location, Segregation and Randomization
Lecture 09 - Mixed Strategies in Theory and Tennis
Lecture 10 - Mixed Strategies in Baseball, Dating and Paying Your Taxes
Lecture 11 - Evolutionary Stability: Cooperation, Mutation, and Equilibrium
Lecture 12 - Evolutionary Stability: Social Convention, Aggression, and Cycles
Lecture 13 - Sequential Games: Moral Hazard, Incentives, and Hungry Lions
Lecture 14 - Backward Induction: Commitment, Spies, and First-Mover Advantages
Lecture 15 - Backward Induction: Chess, Strategies, and Credible Threats
Lecture 16 - Backward Induction: Reputation and Duels
Lecture 17 - Backward Induction: Ultimatums and Bargaining
Lecture 18 - Imperfect Information: Information Sets and Sub-Game Perfection
Lecture 19 - Subgame Perfect Equilibrium: Matchmaking and Strategic Investments
Lecture 20 - Subgame Perfect Equilibrium: Wars of Attrition
Lecture 21 - Repeated Games: Cooperation vs. the End Game
Lecture 22 - Repeated Games: Cheating, Punishment, and Outsourcing
Lecture 23 - Asymmetric Information: Silence, Signaling and Suffering Education
Lecture 24 - Asymmetric Information: Auctions and the Winner's Course