Repeated Games: Cheating, Punishment, and Outsourcing - Game Theory Lecture 22
Explore the concept of repeated games in game theory through this Yale University lecture. Delve into how promises and threats in business and personal relationships can incentivize good behavior, but only if they are credible and part of a subgame perfect equilibrium. Examine the grim strategy and its effectiveness in patient, long-term interactions. Investigate less severe punishments and their relationship to the stability of relationships. Apply these concepts to moral-hazard problems in outsourcing, discussing how wage premiums in emerging markets may be affected by relationship stability. Learn about various strategies for cooperation in repeated interactions, including the "one period punishment" strategy and repeated moral hazard scenarios. Gain insights into the practical applications of game theory in real-world situations through this comprehensive exploration of repeated games.