Game Theory: Infinitely Long

When a game is repeated indefinitely (no known last period), the set of equilibria expands. In the one-shot prisoner's dilemma, defection dominates. In an infinitely repeated game, cooperation can be sustained if players value the future enough — the "shadow of the future" makes the threat of punishment credible. Folk theorems characterise the payoffs that can be achieved in equilibrium; typically any feasible, individually rational payoff is possible with the right strategies (e.g. tit-for-tat, grim trigger). For founders, the lesson is that long horizons enable cooperation: relationships, reputation, and repeated interaction change the game. Design for repeat play when you want cooperation.

When the relationship or market is ongoing, frame it as a repeated game. Cooperate when others do; punish (or exit) when they defect, so that defection isn't profitable. Invest in making the horizon long (contracts, transparency, repeated touchpoints) when you want cooperative outcomes. Short horizons favour defection.

Infinitely repeated games allow cooperation as equilibrium because the future matters. Use trigger or reciprocal strategies; make defection costly. For founders: extend the shadow of the future to enable trust and cooperation.