In many real settings, players don't perfectly observe others' actions. They observe noisy signals. Example: Two firms in a cartel — each observes market price (which depends on both demand shock and competitor's output), not the competitor's output directly.

A public goods game: each of $n$ players contributes $c_i$ to a public fund. Total fund $F = \sum c_i$ is multiplied by $m > 1$ (where $m < n$) and split equally. Nash equilibrium: Contribute 0 (free-riding). Social optimum: Contribute everything (if $m > 1$). Repeated interaction can sustain cooperation. Join Discord PreviousRepeated GamesNextFolk Theorem