Rational behaviour and cooperation degree in competitive situations

Abstract

Decision makers in competitive situations care not only about their own interests but also the interests of their opponents to keep or improve their competitiveness. They have incentives to take cooperative actions as well as non-cooperative actions, depending on the results caused by the actions. These features make traditional game theory inadequate in describing competitors' rational behaviour. This paper first proposes a general framework for analysing decision makers' rational behaviour in multiperson decision situations, and then uses it to model rational behaviour in twoplayer competitive situations. To characterize competitive situations quantitatively, the notion of cooperation degree is formalized. By focusing on a typical two-player competitive situation, relations between cooperation degree and competitors' subjective factors are explored.