Game Theory Slides

Von Neumann/Morgenstern principlesfor analyzingN-person games with coalitions• Pareto OptimalityA solution set should contain only solutionsthat have "Pareto Optimality", meaning thatthere are no other solutions in which all theplayers simultaneously do better.• Individual RationalityAny solution that includes a coalition mustbe "individually rational": no player in thecoalition should do better by simply going italone.• For any S1, S2 in a plausible solution set, itcannot be the case that S1 dominates S2. (S1dominates S2 for an N-person game if thereis a coalition of players that has the will andability to adopt a new solution in whichthey-- i.e., the folks in the to-be-formedcoalition -- all do better.)• Every solution not in the solution set isdominated by some solution in the set.