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Cooperative Game Theory
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Shapley Value
A method of fairly distributing the total gains to all players in the cooperative game based on their marginal contributions. The Shapley value has a unique set of axioms characterizing its fairness.
Transferable Utility
A situation in cooperative games where a utility (or payoff) can be transferred from one player to another without loss, such that the sum of utilities remains the same.
Characteristic Function
A function in cooperative games that assigns a value to each coalition, indicating the amount of payoff the coalition can obtain by itself.
The Bargaining Problem
A cooperative game scenario where a specific payoff must be divided among players who have different views on how it should be distributed, aiming for a fair and mutually agreeable solution.
The Nash Bargaining Solution
A solution to the bargaining problem that maximizes the product of the players' utilities, assuming that each player's utility function is known and that they will not accept less than a certain threshold.
Coalition
A group of players in a cooperative game who agree to work together and often share the payoff that arises from such cooperation.
Core
A concept in cooperative games indicating a set of allocations where no coalition would be better off by deviating and forming their own group. Mathematically, for any coalition , the sum of individual payoffs within is at least as large as .
Side Payments
Transfers of utility (commonly in the form of currency) that can be made between players in a cooperative game to facilitate the formation of coalitions and agreements.
Cooperative Game
A scenario in game theory where players work together to achieve a common goal and may form coalitions. The focus is on what can be achieved together rather than individual goals.
Pareto Optimality
An allocation in a cooperative game is Pareto optimal if there is no other allocation that makes at least one person better off without making someone else worse off.
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