Non-cooperative games with preplay negotiations

Abstract: We consider an extension of strategic normal form games with a phase of negotiations before the actual play of the game, where players can make binding offers for transfer of utilities to other players after the play of the game, in order to provide additional incentives for each other to play designated strategies. Such offers are conditional on the recipients playing the specified strategies and they effect transformations of the payoff matrix of the game by accordingly transferring payoffs between players. We introduce and analyze solution concepts for 2-player normal form games with such preplay offers under various assumptions for the preplay negotiation phase and obtain results for existence of efficient negotiation strategies of the players. Then we extend the framework to coalitional preplay offers in N-player games, as well as to extensive form games with inter-play offers for side payments.