Two-Person Cooperative Games

Abstract

In this chapter, the two-person democratic case with communication will be discussed. The exchange of information serves to integrate the goals of the persons involved. Three cases can be distinguished: harmony, pure conflict, and a mixed case. If harmony exists, there will be no problem, because both parties will choose the alternative with the highest value; the interests run completely parallel. In the case of pure conflict, the interests are diametrically opposed; that is, the interests of the one are to the detriment of the other. A typical example is the two-person zero-sum game. Communication between the parties does not offer any advantage; the solution is given by the maximin strategy. Only in the mixed case, with interests that are neither completely opposed nor parallel, can communication produce a result that is beneficial to both parties, as compared to the case without communication. This is called bargaining or negotiation.