Repeated games

Introduction

In previous chapters of game theory we introduced one-shot games like prisoners dilemma. In other words situations when we are allowed to do one action that result in some outcome (payoff). For example a situation when someone wants to enjoy fast car ride. If he drives really fast he enjoys fast ride and he´s happy but he also rist that police will catch him and arrest. So he must choose between driving fast or not fast according to his ulitily from one decision. But in the real world we often meet situations that repeat or their consequences affect other situations. We can say that our live is set of games in some order and we are playing them. And all of us know that this games, this situations repeat very often. We go to work every day or go shopping for example. Sequence of these games that affect other games is called repeated game.

We can say that every human is rational and follows his own profit. That in other words mean that a person should not have problem with betrayal of other person to get higher payoff. But what if game continues and this betrayal can be avenger? Under these circumstances is the first person willing to betray the second in the first round? It depends on the situation. It depends on the payoff.