Game Th Eory, Bargaining Th Eory, and Strategic Reasoning
| Author | Alan Coddington |
| Published date | 01 March 1967 |
| Date | 01 March 1967 |
| DOI | http://doi.org/10.1177/002234336700400103 |
| Subject Matter | Articles |
GAME
TH EORY,
BARGAINING
TH EORY,
AND
STRATEGIC
REASONING
By
ALAN
CODDINGTON
Queen
Mary
College,
University
of
London
1.
Introduction
The
theory
of
games
has
been
widely
used
as
a
theoretical
basis
for
strategic
reasoning.’
Some
strategists
have
applied
game
theory
directly
to
the
problems
of
strategic
analysis;
others
have
based
their
reasoning
on
theories
of
bargaining
pro-
cesses,
these
theories
in
turn
springing
from
developments
and
reorientations
of
game
theory.
In
either
case
the
result
is
strategic
reasoning
within
a
game
theo-
retic
framework.
Here
we
are
concerned
to
distinguish
strategic
reasoning
from
its
particular
basis,
and
argue
that
formal
bases
for
stra-
tegic
reasoning
other
than
the
game
theo-
retic
one
are
possible.
The
weaknesses
of
game
theory
as
a
framework
for
strategic
thought
have
been
pointed
out
and
its
inadequacies
as
a
model
of
real
world
decision-making
well
documented.2
However,
as
Kenneth
Boul-
ding
has
observed,
...
all
the
facts
in
the
world
do
not
seem
to
be
adequate
to
de-
molish
an
elegant
and
appealing
theory.
Only
theory
can
kill
a
theory ...’3
The
intellectual
appeal
of
a
theory
may
depend
largely
on
the
extreme
weakness
(or
ab-
sence)
of
alternative
theories.
Our
purpose
here
is
to
point
out
the
major
shortcomings
of
game
theory
as
a
basis
for
theories
of
bargaining
and
negoti-
ating
processes
and
hence
its
inadequacy
as
an
indirect
basis
for
strategic
reasoning.
Much
of
the
argument
should,
however,
be
equally
pertinent
to
the
direct
application
of
game
theory
to
problems
of
strategic
choice.
We
shall
also
point,
however
ten-
tatively,
to
an
alternative
theoretical
framework
which
might
serve
as
a
more
fruitful
basis
for
strategic
reasoning.
2.
The
game
theory
approach
to
bargaining
processes
A
two-person
game
model
(in
normal
form)
consists
of
two
sets
of
strategies
the
first
being
the
strategies
available
to
player
1,
the
second
being
those
available
to
player
2.
With
each
pair
of
strategies
oi,
aj
(one
from
each
set)
is
associated
an
outcome
Oij.
Each
outcome
has
associated
with
it
a
pair
of
utilities
uij,
vij,
represent-
ing
the
preferences
of
the
players
I
and
2
respectively
among
the
outcomes
Oij.
The
situation
can
be
represented
by
a
table
as
shown
in
Figure
1.
The
game
then
consists
of
player
1
choosing
a
strategy
from
the
set
R
and,
simultaneously,
player
2
choosing
a
strategy
from
the
set
S.
Figure
1.
Traditionally,
games
have been
divided
into
two
kinds,
’cooperative’
and
’non-
cooperative’
according
to
the
manner
in
which
the
choice
of
strategies
is
made.
In
a
cooperative
game
the
players
have
complete
freedom
to
make
joint
binding
agreements
by
the
use
of
preplay
com-
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