Now suppose that the players trade repeatedly. Let ail represent the action taken by player i in period t; let ~ ; ( u , , , u2,) represent the resulting payoff earned by player i in period t; and let 6 be the discount factor applied to compute the present value of a stream of payoffs. If trade is frequent, then 6 is close to one; if trade occurs only once (or is quite infrequent), then 6 is (close to) zero.

DEFINE: Clarifies that the discount factor δ reflects trade frequency, not just time preference — a useful interpretive nuance.

PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE O…, loc. 47