Cooperation in Two Person Games, Revisited

Luminaries such as Nash (1953), Rai a (1953), and Selten (1960), studied cooperation in two-person strategic games. We point out that when players may make monetary side payments, i.e., bimatrix games with transferable utility (TU), all previous solutions coincide. This solution is justified by simple axioms and an elementary decomposition of every such game into a (competitive) zero-sum game and a (cooperative) team game.