Game theory -  A Tutorial

Jean Walrand

Cooperative: Equilibrium

Consider two players and assume that the set of pairs of rewards (x1, x2), for all possible strategies, is shown in the figure below:

Rewards are “Pareto” if there is no pair with both components larger. Non-Pareto rewards are dominated. Good rewards should be Pareto.

Rewards (x1, x2) are Max-Min if one cannot increase a component without deceasing a smaller one.

Rewards are socially efficient if their sum is maximum.

Rewards correspond to a Nash bargaining equilibrium if their product is maximum.