# What is a cooperative equilibrium?

**cooperative equilibria**' has been imported into economics from game theory. It refers to the

**equilibria**of economic situations modelled by means of

**cooperative**games and solved by appealing to an appropriate

**cooperative**solution concept.

Click to see full answer

Considering this, is the cooperative strategy a Nash equilibrium?

A ** Nash Equilibrium ** is NOT always an ** Equilibrium ** in Dominant ** Strategies ** . The ** cooperative strategy ** is defined as the best joint outcome for both players together. ** Cooperative Strategy ** = A ** strategy ** that leads to the highest joint payoff for all players. This outcome provides the highest profits to both firms.

Also, what are cooperative and non cooperative games? In ** game ** theory, a ** non **-** cooperative game ** is a ** game ** with competition between individual players, as opposed to ** cooperative games ** , and in which alliances can only operate if self-enforcing (e.g. through credible threats).

Also, what is Nash equilibrium example?

In the ** Nash equilibrium ** , each player's strategy is optimal when considering the decisions of other players. Every player wins because everyone gets the outcome they desire. The prisoners' dilemma is a common game theory ** example ** and one that adequately showcases the effect of the ** Nash Equilibrium **.

Why is Nash equilibrium important?

** Nash equilibrium ** also allows for the possibility that decision makers follow randomised strategies. Allowing for randomisation is ** important ** for the mathematics of game theory because it guarantees that every (finite) game has a ** Nash equilibrium **.