Cooperation in Strategic Games Revisited
For two-person complete-information strategic games with transferable utility, all major variable-threat bargaining and arbitration solutions coincide. This confluence of solutions by luminaries such as Nash, Harsanyi, Raiffa, and Selten, is more than mere coincidence. Staying in the class of two-person games with transferable unility, the present paper presents a more complete theory that expands their solution. Speci cally, it presents: (1) a decomposition of a game into cooperative and competitive components, (2) an intuitive and computable closed-form formula for the solution, (3) an axiomatic justi cation of the solution, and (4) a generalization of the solution to games with private signals, along with an arbitration scheme that implements it. The objective is to restart research on cooperative solutions to strategic games and their applications.
|Date of creation:||01 Dec 2011|
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|Contact details of provider:|| Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014|
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