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OK, I have a beautiful game now, so what?
Formulating a situation as a game allows us to have a more clear vision of the situation, allowing a better understanding of the interactions, and of the actors interacting, thinking about their objectives, exploring the strategical options they have.
Hence, trying to better understand the behavior they could adopt in following their objectives and the collective outcome of their behavior in this situation
Under the assumptions we have adopted until now, the GT proposes solution concepts for the games to guide our thinking about the last two points above
What could players do, and
what the collective outcome could be?
These solution concepts are strongly based on the rationality assumption
Individual rationality principle (IRP): Each agent is perfectly conscious of the objective she aims to accomplish, and would only choose strategies compatible with this objective
In many games, this is the sole motivation of the agents and they only care about their individual objectives and we call these games non-cooperative games.
Our example is a non-cooperative game. Pure market competition is a non-cooperative game.
But, in many situations, agents care about the collective outcome they could obtain. They must cooperate in these situations and we call them cooperative games:
A team working together,
or firms in a cartel do participate to cooperative games.
Different solution concepts are necessary for analyzing these types of situations.
This is the third dimension distinguishing different types of games (besides temporality and information).
But, many situations are even a mixture of these two types:
In a football match the game between the members of each team is cooperative (they try to mark points together)
and the game between the two teams is non-cooperative (each one tries to mark the maximum points to win)
Here we only consider non-cooperative games, but I invite you to consult, for example, [Osborne, 1994] on cooperative games.
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