In a repeated game, punishments that result in heavy damages are an incentive for players to adopt the strategies that result in a cooperative equilibrium.
In game theory, a cooperative game (or coalitional game) is a game with rivalry between groupings of players (referred to as "coalitions") because there is a chance that cooperative behavior will be enforced from the outside (e.g. through contract law). These are opposed to non-cooperative games, in which all agreements must either be self-enforcing or there is no room for alliance formation (e.g. through credible threats).
Cooperative game theory is a paradigm used to analyze cooperative games that focuses on foreseeing the formation of coalitions, the joint actions that groups perform, and the ensuing collective payoffs. It differs from conventional non-cooperative game theory, which focuses on evaluating Nash equilibria and forecasting player behavior and rewards.
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