The theory of social situations is applied in this chapter to games in normal form. As in the case of cooperative games, I claim that here, too, the description of a social environment as a normal form game is not satisfactory. In particular, it does not provide any information concerning either the beliefs of the players or the availability of the legal institutions that specify, for example, whether self-commitments, communications with other players, or the signing of binding agreements are allowed. Accordingly, a normal form game can be associated with a number of situations.

Stable (both optimistic and conservative) standards of behavior for some of the situations we shall associate with normal form games yield several of the most important game theoretic solution concepts, such as Nash and strong Nash equilibrium. As was the case with cooperative games, this characterization of known solution concepts sheds new light on the negotiation processes, belief structures, and institutional assumptions that underlie them.

In addition, again as in the previous chapter, the proposed approach offers new solution concepts. For example, by representing a normal form game as a situation, it is possible to analyze the consequences of “open negotiations.” That is, in contrast to the Nash-type situations where individuals make their moves “secretly,” I consider the possibility that players state their decisions openly. (This is in the spirit of the negotiation process delineated by the vN&M situation; see Section 6.2.) I distinguish among four cases, depending on whether it is possible to make “contingent threats” or, rather, only “irrevocable commitments” and whether coalitions are permitted to form.