Transferable utility is a concept in

cooperative game theory In game theory, a cooperative game (or coalitional game) is a game with competition between groups of Player (game), players ("coalitions") due to the possibility of external enforcement of cooperative behavior (e.g. through contract law). Those ...

and in

economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...

Utility As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosopher ...

is ''transferable'' if one player can losslessly transfer part of its utility to another player. Such transfers are possible if the players have a common

currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general def ...

that is valued equally by all. Note that being able to transfer

cash In economics, cash is money in the physical form of currency, such as banknotes and coins. In bookkeeping and financial accounting, cash is current assets comprising currency or currency equivalents that can be accessed immediately or near-imm ...

payoffs does not imply that utility is transferable: wealthy and poor players may derive a different utility from the same amount of money. Transferable utility is assumed in many cooperative games, where the payoffs are not given for individual players, but only for

coalition A coalition is a group formed when two or more people or groups temporarily work together to achieve a common goal. The term is most frequently used to denote a formation of power in political or economical spaces. Formation According to ''A Gui ...

s. In this case the assumption implies that irrespective of the division of the coalitional payoff, members of the coalition enjoy the same total utility.

References

{{game theory Game theory Utility