Cooperative versus noncooperative game

The economic games can be cooperative or noncooperative.

Cooperative Game is a game in which players negotiate their contracts so that they can make joint strategies. Generally these type of games are played between buyers and sellers.
Firms buying raw material or buying a service can negotiate for price settlement. Eg. If as a firm maker , I am changing some parts of all the machines.

Noncooperative Game is a game in which there is no form of negotiation and binding while setting up a price of its product, a firm will take into account the other competitive firm’s behavior. Beause if it will keep its prices high, then no one is going to buy its product because of high prices. So, it keeps similar prices.

** when we talk about game theory, its about noncoperative games.


Anonymous said...

I don't agree with the last statement; game theory encompasses cooperative and non-cooperative games, does it not?

Meilin He said...

I agree to another comment, game theory contains both non-cooperative game and cooperative game.