ECON301 Lecture 15: Lecture15

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There are two broad approaches to decision problem analysis using game theory. The distinction lies between cooperative and non-cooperative games. This distinction does not mean that agents necessarily cooperate in cooperative game theory nor does it mean that agents necessarily do not cooperate in non- cooperative game theory. Cooperative means that the players can write binding contracts on their actions. For example, in cooperative game theory, players can commit to actions, which when they have to be taken, possibly end up being against that player"s interests at that point in time. By contrast, non-cooperative game theory promises no such commitment to future actions. When a set of moves results in a player"s turn to decide upon a move going forward, the player is not constrained by any prior commitments and will decide their move based on their best personal outcome. We will only concern ourselves with non-cooperative game theory in this course.

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