An equilibrium cooperative optimization solution for two-person non-transferable utility games

Abstract

In this paper, we provide an equilibrium cooperative optimization solution to two-person cooperative games in which the payoffs or utility are non-transferable. In particular, a strategic scheme is designed to determine the cooperative weight for joint optimization leading to the equilibrium point on the Pareto optimal frontier. A cooperative optimization solution with a non-cooperative game theoretic foundation is obtained. It is significantly different from existing cooperative solutions like the Nash bargaining solution, the Kalai proportional bargaining solution the Kalai-Smorodinsky bargaining solution