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Cooperative Game Theory
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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.
Coalition
A group of players in a cooperative game who agree to work together and often share the payoff that arises from such cooperation.
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.
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 .
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.
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.
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.
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.
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.
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