Cooperative Game Theory

In preparation for the subsequent chapters we provide the reader in this chapter with some game properties and solution concepts from cooperative game theory with transferable Utility. We conflne ourself in discussing cooperative game theory to the part where the cooperative Output of a coalition can be measured by a numeraire good like money and therefore can be transfered among the players via side-payments. The purpose of this chapter is not to give a comprehensive survey of cooperative game theory. We will just discuss these parts which are valuable to understand the remaining parts of the monograph where we rely to a large extent on cooperative game theory to analyze the incentives for cooperative decision making in common pool situations. In our investigation of a common pool environment we are interested in the feasible gains which are realizable through mutual Cooperation and to the issue whether individuals are better off through Cooperation than acting alone. The formal aspect for Coming up with an answer will be captured through cooperative game theory.