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This book offers a new and integrative approach to the study of formal models in the social and behavioural sciences. The theory presented here unifies both the representation of the social environment and the equilibrium concept. The theory requires that all alternatives that are available to the players be specified in an explicit and detailed manner, and this specification is defined as a social 'situation'. A situation, therefore, not only consists of the alternatives currently available to the players, but also includes the set of opportunities that might be induced by the players from their current environment. The theory requires that all recommended alternatives be both internally and externally stable; the recommendation cannot be self-defeating and, at the same time, should account for alternatives that were not recommended. In addition to unifying the representation and the solution concept, the theory also extends the social environments accommodated by current game theory. For example, the theory naturally accommodates coalition formation as well as bounded rationality concerning both the perception and the computation abilities of the players. Moreover, the theory forces the specification of all relevant aspects for rational decision making, such as the existing institutions and the negotiation process. The theory of social situations relates many of the currently disparate game-theoretic solution concepts, in addition to suggesting new and interesting ones.
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