Conditions for Cooperation and Trading in Value-Cost Dynamic Games

In value-cost dynamic games multiple agents adjust the flow and allocation of investments to action pathways that affect the value of other agents. This article determines conditions for cooperation among agents who invest to gain value from each other. These conditions are specified in a game-theoretic setting for agents that invest to realize cooperative benefits and value targets. The dynamic interaction of allocation priorities and the stability of equilibrium concepts is analyzed. One focus is to determine solutions concepts based on cost-exchange ratios and benefit-exchange ratios that represent trade-offs between the agents, as a function of the action and interaction effects of the respective action pathways. The general approach is applied to the trading between buyers and sellers of goods to determine conditions for mutually beneficial market exchange, the price of goods, and the specialization between consumers and producers