Cooperative vs Non-Cooperative Games

Discussion

Cooperative vs Non-Cooperative Games

Kyle Birchard:

"Cooperative Games: Imagine an interaction for which it is the case that everything that both is affected by the actions of the players and is of concern to any of the players is subject to binding (meaning costlessly enforceable) agreement. This is termed a cooperative game. The term does not refer to the feelings of the parties about each other but simply to the institutional arrangements governing their interactions.

Non-cooperative Games: More commonly, however, something about the interaction is not subject to binding agreement. Such situations are modeled as noncooperative games.

Notice how this doesn’t necessarily refer to the ability or desire to cooperate, Cooperative Games simply refer to the enforcement level found in binding vs non-binding agreements.

In the social arrangement between an employer and employee, part of the interaction may be addressed cooperatively, as when an employer and an employee bargain over a wage and working hours. Other aspects of the same interaction may be noncooperative because of the impossibility of writing or enforcing the relevant contracts.

Examples include how hard the worker works or whether the employer will invest the resulting profits back into the company. When the employer is measuring productivity, he/she plays a cooperative game if he/she has a ticker at the door that tracks when the employee walks in and out. However, if the employer can’t verify the quality of work or effort put in, then the game is non-cooperative.

In technology jobs, and inside startups especially, it’s often difficult and costly to track worker productivity at work → making it a non-cooperative game. This is why we hear so often about ‘company culture’ and establishing a common ‘mission’. When an employer has no way enforce certain agreements, and rational employees can slack off without repercussions, therefore a narrative of ‘culture’ is used to imprint made-up social contracts.

Most commonly, social interactions are categorized based on whether the game representing it is cooperative or noncooperative and whether the payoffs of the game are common interest or conflict." (https://medium.com/blockchannel/cryptoeconomic-theory-game-theory-basics-fb3a49aab1a8)