We study a repeated game where a seller, who has a short-term incentive to
supply low quality, is periodically matched with a randomly selected buyer.
Buyers observe only the outcomes of their neighbors' games and may receive
signals from them. When the buyer population is large, the seller may sell
high quality even when each buyer observes her action in any given period
with an arbitrarily small probability. When networking among buyers is cost
ly, low quality is always supplied with a positive probability. For this ca
se, we characterize an equilibrium where the seller randomizes between high
and low quality.