Game theory has two major branches—cooperative and non-cooperative. Cooperative games have been used extensively in both economics and political science. One notable practical application of cooperative game theory is to problems of cost allocation and the division of common property, which are ubiquitous in economics. As an example, consider the problem of allocating the cost of a lecture tour amongst the institutions visited. Cooperative games provide a fruitful model for the analysis of allocation problems, and the various solution concepts which have been proposed for cooperative games can be interpreted as alternative solutions to an allocation problem. These solutions can be used to evaluate the rules-of-thumb which are used in practice and to prescribe allocations embodying particular normative principles.
KeywordsCooperative Game Player Game Solution Concept Simple Game Grand Coalition
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