The repeated games that are analyzed in game theory do not seem to exist in reality. The issue is that stages of a repeated game are played in the context of a histories of different lengths and hence the utilities of their outcomes may not be the same. The diferences in utility have to do with several factors, including reduced risks, wealth accumulation, and changing attitudes toward other players. A new analysis is proposed for explaining cooperative behavior in the finitely-repeated prisoners' dilemma. A gift-giving optimization problem is introduced.
By: Nimrod Megiddo
Published in: RJ10492 in 2011
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