Cooperative Game Theory and the Core

Cooperative game theory is fundamentally different from the types of games we have studied so far, which we will now refer to as noncooperative games. In noncooperative games, actions are taken by individual players, and the outcome of the game is described by the action taken by each player, along with the payoff that each player achieves. In contrast, cooperative games consider the set of joint actions that any group of players can take. The outcome of a cooperative game will be specified by which group of players forms, and the joint action that that group takes. We refer to these groups of players as coalitions. Before we continue, let’s establish the following notation for analyzing an n-person cooperative game.