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with some inputs for his business, let's say some fruit.
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And each period he's supposed to provide me with some input for my business,
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namely vegetables.
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Clearly there are opportunities here, in each period, for us to cheat.
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We could cheat both on the quality of the fruit
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that I provide or the quantity of the fruit that I provide to Jake,
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and he can cheat on the quantity or quality of the vegetables
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that he provides to me.
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Our central intuition is:
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perhaps what can give us good incentives is the idea that
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if Jake cooperates today, then I might cooperate tomorrow,
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I might not cheat tomorrow.