Persistence boosts product quality, revolutionizing intertemporal incentives in business.
Persistence can be used to create incentives in a game where a long-term player interacts with short-term players. The quality of a product depends on past and current investment choices. A Markov equilibrium emerges as the unique perfect public equilibrium under certain conditions. Persistence can create effective incentives when traditional methods fail. The continuous-time setting provides sharp insights for dynamic games.