Economics Game Theory Questions
Cooperative game theory focuses on situations where players can form coalitions and make binding agreements to achieve mutually beneficial outcomes. It assumes that players can communicate, trust each other, and enforce agreements. Cooperative game theory analyzes how players can allocate resources and distribute payoffs among themselves in a fair and efficient manner.
On the other hand, non-cooperative game theory assumes that players act independently and do not form coalitions or make binding agreements. It analyzes strategic interactions among self-interested players who make decisions based on their own individual preferences and without considering the impact on others. Non-cooperative game theory typically involves analyzing games with simultaneous or sequential moves, where players aim to maximize their own payoffs without any coordination or cooperation.
In summary, the main difference between cooperative and non-cooperative game theory lies in the assumption of whether players can form coalitions and make binding agreements or if they act independently and pursue their own self-interests.