folk theorem

The "folk theorem" in game theory refers to a set of results that state that in infinitely repeated games, any feasible and individually rational payoff can be achieved as a Nash equilibrium. This means that if players interact over an extended period, they can coordinate their strategies to reach outcomes that might not be possible in a single-round game.1

A Nash equilibrium is a state where no player can improve their outcome by unilaterally changing their strategy. Game theory uses mathematics to model situations with interdependent decisions, applicable to economics, military strategy, and even recreational games. Noncooperative games are those where players cannot make binding agreements. The folk theorem highlights the power of repeated interactions to sustain cooperation, even in scenarios where individual incentives might otherwise lead to conflict.12