  This paper introduces a unified framework called cooperative extensive form
games, which (i) generalizes standard non-cooperative games, and (ii) allows
for more complex coalition formation dynamics than previous concepts like
coalition-proof Nash equilibrium. Central to this framework is a novel solution
concept called cooperative equilibrium system (CES). CES differs from Nash
equilibrium in two important respects. First, a CES is immune to both
unilateral and multilateral `credible' deviations. Second, unlike Nash
equilibrium, whose stability relies on the assumption that the strategies of
non-deviating players are held fixed, CES allows for the possibility that
players may regroup and adjust their strategies in response to a deviation. The
main result establishes that every cooperative extensive form game, possibly
with imperfect information, possesses a CES. For games with perfect
information, the proof is constructive. This framework is broadly applicable in
contexts such as oligopolistic markets and dynamic political bargaining.
