── ── Strategy
Repeated Games & Reputation
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…
How it works
Run the Repeated-Game Analysis across these steps:
1. Establish true repetition. Indefinite/infinite → folk-theorem logic applies. Finite with known endpoint → backward induction risk; add uncertainty or commitment devices. 2. Estimate δ. Cooperation threshold: δ ≥ (T − R) / (T − P). Below threshold → change the structure first; no strategy design saves it. 3. Confirm observability. Perfect → TFT variants work. Noisy → Generous TFT (cooperate ~1/3 of the time after apparent defection) or Contrite TFT. Pure TFT under noise → recrimination spirals. 4. Select strategy. TFT (clean bilateral) · Generous TFT (noisy) · Pavlov (mixed populations) · Grim Trigger (high-stakes, credible threat only) · benchmarks: Always Defect / Always Cooperate. 5. For reputation infrastructure: design Observation · Aggregation · Persistence · Manipulation resistance — all four required; missing one breaks the system. 6. Stress-test endgame. Mitigations: endpoint uncertainty; legacy concerns; successor obligations; overlapping generations. 7. Stop-rule: lifetime cooperative payoff must beat one-shot defection by margin sufficient to absorb noise.
When to use it
- user asks how to build trust with a repeat counterparty, whether to retaliate after a partner defected, how to design a reputation system, whether a long-term relationship can survive betrayal, or says 'shadow of the future / tit-for-tat / burn this bridge / they'll remember this / build credibility.'
When not to use it
interaction is genuinely one-shot with no third-party observers (use prisoners-dilemma), or situation is zero-sum competition where repetition entrenches rivalry.
Worked example
Robert Axelrod's Computer Tournament, 1979–1981
The empirical foundation of modern repeated-game theory was not derived. It was observed — under conditions of unprecedented procedural rigor for social science — in two computer tournaments run by political scientist Robert Axelrod at the University of Michigan from 1979 to 1981.
Install this skill (free, MIT)
npx skills add deciqAI/knowledge-skills