Abstract
Based on recent developments in non-cooperative coalitional bargaining theory, I review game theoretical analyses of cooperation and institution. First, I present basic results of the random-proposer model and apply them to the problem of involuntary unemployment in a labour market. I discuss extensions to cooperative games with externalities and incomplete information. Next, I consider the enforceability of an agreement as an institutional foundation of cooperation. I re-examine the contractarian approach to the problem of cooperation from the viewpoint that individuals may voluntarily create an enforcement institution.
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