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.
Details
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Author
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Document Date
2006/11/01
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Document Type
Policy Research Working Paper
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Report Number
WPS4072
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2010/07/01
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Disclosure Status
Disclosed
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Doc Name
Cooperative game theory and its application to natural, environmental, and water resource issues : 1. basic theory
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Keywords
characteristic function;cost allocation method;water and environmental;fishery management problem;supply of good;allocation of cost;amount of water;distribution of resource;individual rationality;cooperative game;water resource;utility function;fair share;cost sharing;cost functions;real numbers;allocation rule;allocation problem;utility value;binding agreement;coalition building;scarce resource;strategic behavior;environmental amenity;mathematical model;environmental issue;Natural Resources;incremental cost;equitable allocation;natural property;environmental application;real value;tax rate;literature review;minimum tax;uniform tax;impossibility theorem;market externality;ceteris paribus;transaction cost;environmental externality;cost information;increased competition;expected value;game theory;city water;environmental problem;social justice;environmental use;strategic objective;behavioral pattern;Environmental Resources;resource scarcity;agricultural association;average cost;
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Citation
Parrachino,Irene Patrone,Fioravante Zara,Stefano
Cooperative game theory and its application to natural, environmental, and water resource issues : 1. basic theory (English). Policy, Research working paper ; no. WPS 4072 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/540621468141268429/Cooperative-game-theory-and-its-application-to-natural-environmental-and-water-resource-issues-1-basic-theory