ABSTRACT
T. C. Schelling summarizes the task of strategic bargaining in international relations as the “rational non-use of force.” Note that in the theory of the cooperative game, the problem shifts from choosing optimal strategies in playing the game to choosing optimal bargaining strategies, e.g., choosing demands, threats, and promises. As in the theory of the non-cooperative game, a solution is found, one that reflects not only the relative “strengths” of the players but also their common interest. The players in a two-person cooperative game coordinating their strategies so as to realize their common interest can be said to have formed a coalition. A play of a cooperative game can be regarded as consisting of two phases. In the first phase, the players, recognizing their communality of interest, coordinate their strategies so as to achieve any of the Pareto-optimal outcomes. In the second phase, they contend for the outcome among these, since their interests diverge.
