Strategic and Cooperative Decision Making

Department of Econometrics
Programme Leader: Professor G. van der Laan

This programme focuses on economic situations involving interactive decision making with possibly diverging interests. In competitive or strategic situations decision makers act individually without being able to contract each others’ actual behaviour, meaning promises might not be kept. Therefore, individual incentives play a prominent role. Strategic or non-cooperative game theory provides a framework to analyse such decision situations. Applications include auction theory, strategic voting, collective behaviour, interaction networks and negotiations on international treaties. In cooperative situations enforceable binding agreements between the decision makers are possible. In such situations the main issue is to obtain a reasonable distribution of the joint revenues from cooperation. Such allocation problems can be modelled by cooperative games. Applications include cost allocation problems, allocation of bankruptcy deficits, optimal assignment problems, water distribution problems and matching opportunities. Cooperative game theory also provides useful tools to solve problems in network theory, social choice, and multi-criteria analysis.

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