Cooperative vs. non-Cooperative Game Theory

Research fields in game theory can be distinguished in cooperative and non-cooperative game theory. The difference is that in the non-cooperative game theory, actors cannot agree on a binding contract. Whereas cooperative game theory assumes that there are binding contracts possible.

The consequence is that in cooperative game theory, once an agreement is reached among the participants, they can rely on their fulfillment. In a non-cooperative setup, this remains to be seen. Agreements are rather seen as “cheap talk” since participants can take different actions.

Because of those different assumptions, in cooperative game theory, we focus more on how an agreement should look like that everybody agrees. Whereas in the non-cooperative game theory, incentives and the selected strategies are more important, so that everybody behaves in the desired way voluntarily.

In a blockchain setup, we mostly deal with the non-cooperative game theory. That’s why we mostly deal with non-cooperative models.