Repeated Games

This chapter discusses repeated games, i.e., the multiple repetition of a simultaneous stage game. To be able to evaluate strategies for which the payoffs can extend over many periods in the future, it is shown how the present value of a cash flow can be calculated by discounting. Repeated games can have a stationary structure, i.e., the game, including the payoffs and strategy options, remains unchanged, or a non-stationary structure, i.e., the payoffs change, for example because the bargaining chips are reduced over time. The number of repetitions also plays a role for the solution, whereby a distinction must be made here between a finite and an infinite number of repetitions. In the latter case, the strategy space expands considerably, so that almost any game outcome can be achieved through a suitable choice of strategy and thus problematic game outcomes can be overcome.