ABSTRACT
Two-person games discussed above are non-cooperative. In other words, it has been assumed that the players are not able to make enforceable commitments regarding their future strategy choices. They may announce plans to play certain strategies, but by definition these announcements are not binding. Many negotiation, deal-making and bargaining activities take place under circumstances where binding commitments can be assumed. In other words, in these situations the parties typically keep their word once the deal has been made. For example, in labor negotiations of the modern developed world the parties know that they will be facing each other again in the not-too-distant future and that it therefore makes no sense to renege from one’s commitments given at the negotiation table. In other contexts, there may be a contract-enforcing body with adequate powers to ensure that contracts are being adhered to. It thus makes sense to study rational behavior under cooperative settings.
