Cooperative vs. Non-Cooperative Games

In game theory, a game is a scenario where players make decisions to achieve their goals, considering the possible choices of others.

These games are primarily categorized into two types which are non-cooperative and cooperative.

In non-cooperative games, players make decisions independently. They do not have any formal agreements or binding commitments with each other.

For example, consider the game of Chess.

In this game, two players compete on a chessboard, each aiming to checkmate the opponent's king while protecting their own.

Each player must make strategic decisions individually without knowing the opponent's next move. Players don't make formal agreements to follow specific strategies, reflecting the essence of non-cooperative games.

Cooperative games, on the other hand, allow players to form agreements. They work together to achieve a better outcome for the group.

For instance, consider two sellers selling apples on the same street.

They might come to an agreement to set their prices at a certain level. This would avoid a price war, ensuring better profits for both sellers by avoiding destructive competition.