Cooperative Bargaining Unlocks Mutually Beneficial Outcomes for Conflicting Parties
The article introduces cooperative game theory by studying two-person bargaining problems. It connects cooperative and noncooperative game theory through the Nash program. The concept of a cooperative payoff region is developed for practical use. The Coase theorem is explained in the context of a Nash bargaining problem. A variant of the Nash bargaining solution with breakdown and deadlock points is described. Nash's axiomatic bargaining theorem is proven. The Kalai-Smorodinsky and Walrasian bargaining solutions are presented as alternatives to Nash's solution.