Game theory reveals how reputation shapes long-term interactions between players.
The article explores how players in a repeated game can build a reputation over time, even with imperfect monitoring. One player can be locked into a specific strategy, while the other player can observe their actions perfectly. The study shows that if a player has a certain type that leads to their highest payoff, they can secure this payoff in the long run. However, if their type results in a lower payoff, the player's best outcome is limited to a certain level. This research sheds light on how players can strategically navigate repeated interactions to achieve their desired outcomes.