Cooperative Game Theory and its Application to Natural, Environmental, and Water Resource Issues: 1. Basic Theory

30 Pages Posted: 20 Apr 2016

See all articles by Irene Parrachino

Irene Parrachino

Università degli Studi di Genova

Stefano Zara

Università degli Studi di Genova

Fioravante Patrone

Università degli Studi di Genova - Dipartimento di Matematica

Date Written: November 1, 2006

Abstract

Game theory provides useful insights into the way parties that share a scarce resource may plan their use of the resource under different situations. This review provides a brief and self-contained introduction to the theory of cooperative games. It can be used to get acquainted with the basics of cooperative games. Its goal is also to provide a basic introduction to this theory, in connection with a couple of surveys that analyze its use in the context of environmental problems and models. The main models (bargaining games, transfer utility, and non-transfer utility games) and issues and solutions are considered: bargaining solutions, single-value solutions like the Shapley value and the nucleolus, and multi-value solutions such as the core. The cooperative game theory (CGT) models that are reviewed in this paper favor solutions that include all possible players and ignore the strategic stages leading to coalition building. They focus on the possible results of the cooperation by answering questions such as: Which coalitions can be formed? And how can the coalitional gains be divided to secure a sustainable agreement? An important aspect associated with the solution concepts of CGT is the equitable and fair sharing of the cooperation gains.

Keywords: Environmental Economics & Policies, Economic Theory & Research, Livestock & Animal Husbandry, Education for the Knowledge Economy, Education for Development

Suggested Citation

Parrachino, Irene and Zara, Stefano and Patrone, Fioravante, Cooperative Game Theory and its Application to Natural, Environmental, and Water Resource Issues: 1. Basic Theory (November 1, 2006). World Bank Policy Research Working Paper No. 4072. Available at SSRN: https://ssrn.com/abstract=946831

Irene Parrachino (Contact Author)

Università degli Studi di Genova

Via Vivaldi 5
Genova, 16126
Italy

Stefano Zara

Università degli Studi di Genova

Via Vivaldi 5
Genova, 16126
Italy

Fioravante Patrone

Università degli Studi di Genova - Dipartimento di Matematica ( email )

Via Dodecaneso 35
16146 Genoa
Italy
+39-010-3536835 (Phone)
+39-010-3536752 (Fax)

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