Cooperative Games in Game Theory
Cooperative games in game theory are games where players can form coalitions and work together to achieve a common objective. In this lesson, we will look at some common examples of cooperative games.
One of the simplest examples of a cooperative game is the prisoner's dilemma. In this game, two suspects are being interrogated separately by the police. Each suspect has a choice between confessing or remaining silent. If both confess, they both get a medium sentence. If both remain silent, they both get a light sentence. However, if one confesses while the other remains silent, the one who confesses gets a light sentence, while the other gets a heavy sentence. In this game, cooperation between the suspects can lead to a better outcome for both of them.
Another example of a cooperative game is the tragedy of the commons. In this scenario, a group of farmers share a common grazing land. Each farmer can graze as many animals as they want on the land. However, if all farmers graze too many animals, the land will be overgrazed and become unusable. In this game, cooperation between the farmers to limit their grazing can lead to a better outcome for all of them.
A third example of a cooperative game is the public goods game. In this game, a group of people can contribute money to a common pool, which is then used to provide a public good, such as a park or a library. If everyone contributes equally, the public good is provided and everyone benefits. However, if some people contribute more than others or not at all, the public good may not be provided, and everyone suffers.
Finally, the bargaining game is a cooperative game where two players must divide a fixed amount of resources between them. If they cannot agree on a division, the resources are lost. In this game, cooperation between the players to reach a mutually beneficial agreement can result in a better outcome for both of them.
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