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Book part

Marc Nerlove

The basic ideas of Cournot and those who came after him are related to the recent work of Nash and his notion of an “equilibrium point.” It is shown that the Nash

Abstract

The basic ideas of Cournot and those who came after him are related to the recent work of Nash and his notion of an “equilibrium point.” It is shown that the Nash equilibrium point incorporates the main contribution of Cournot to the solution of the duopoly problem and that the major criticism that may be made against the Cournot equilibrium may also be made against the Nash equilibrium. It is then indicated to what use this weakness might be put in the study of bargaining.

Details

Including a Symposium on the Historical Epistemology of Economics
Type: Book
ISBN: 978-1-78714-537-5

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Article

Emmanuel M. Tadjouddine

As agent‐based systems are increasingly used to model real‐life applications such as the internet, electronic markets or disaster management scenarios, it is important to…

Abstract

Purpose

As agent‐based systems are increasingly used to model real‐life applications such as the internet, electronic markets or disaster management scenarios, it is important to study the computational complexity of such usually combinatorial systems with respect to some desirable properties. The purpose of this paper is to consider two computational models: graphical games encoding the interactions between rational and selfish agents; and weighted directed acyclic graphs (DAG) for evaluating derivatives of numerical functions. The author studies the complexity of a certain number of search problems in both models.

Design/methodology/approach

The author's approach is essentially theoretical, studying the problem of verifying game‐theoretic properties for graphical games representing interactions between self‐motivated and rational agents, as well as the problem of searching for an optimal elimination ordering in a weighted DAG for evaluating derivatives of functions represented by computer programs.

Findings

A certain class of games has been identified for which Nash or Bayesian Nash equilibria can be verified in polynomial time; then, it has been shown that verifying a dominant strategy equilibrium is non‐deterministic polynomial (NP)‐complete even for normal form games. Finally, it has been shown that the optimal vertex elimination ordering for weighted DAGs is NP‐complete.

Originality/value

This paper presents a general framework for graphical games. The presented results are novel and illustrate how modeling real‐life scenarios involving intelligent agents can lead to computationally hard problems while showing interesting cases that are tractable.

Details

International Journal of Intelligent Computing and Cybernetics, vol. 4 no. 2
Type: Research Article
ISSN: 1756-378X

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Book part

Kosuke Uetake and Yasutora Watanabe

We propose a set-estimation approach to supermodular games using the restrictons of rationalizable strategies, which is a weaker solution concept than Nash equilibrium

Abstract

We propose a set-estimation approach to supermodular games using the restrictons of rationalizable strategies, which is a weaker solution concept than Nash equilibrium. The set of rationalizable strategies of a supermodular game forms a complete lattice, and are bounded above and below by two extremal Nash equilibria. We use a well-known alogrithm to compute the two extremal equilibria, and then construct moment inequalities for set estimation of the supermodular game. Finally, we conduct Monte Carlo experiments to illustrate how the estimated confidence sets vary in response to changes in the data generating process.

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Structural Econometric Models
Type: Book
ISBN: 978-1-78350-052-9

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Article

Marjan Raoufinia, Vahid Baradaran and Reza Shahrjerdi

The purpose of this study is to analyze comparatively the properties of open-loop and closed-loop equilibria in a dynamic oligopoly model with price dynamics and reflexive…

Abstract

Purpose

The purpose of this study is to analyze comparatively the properties of open-loop and closed-loop equilibria in a dynamic oligopoly model with price dynamics and reflexive behavior of market agents.

Design/methodology/approach

To consider dynamic competitive markets, the authors focus on a differential game theory in oligopolistic structures, using analytical models to illustrate how advertising effort, good differentiation and price stickiness interact simultaneously in the open-loop and the closed-loop Nash equilibria. The comparative assessment of these equilibria obtains some significant results.

Findings

An optimization model that enriches the continuous time is presented. Under the open-loop and the closed-loop, Nash equilibrium showed an increase in the total output, advertising in price stickiness and promotional efficiency, while there was a decrease in product differentiation and advertising promotional efficiency. However, the open-loop equilibrium levels are larger than the closed-loop equilibrium. Under the closed-loop information, the long-run equilibrium was faster than the opened-loop in a dynamic oligopoly. The graphical illustration was used to present the behavior of the model parameters.

Practical implications

This study helps managers to choose an appropriate price and advertising adjustment to maximize profit. The obtained results may help firms to make the smart decision and may provide managers the valuable tool for making decisions in the competitive market environments.

Originality/value

This is a first attempt to analyze a dynamic oligopoly in the differentiated market environment. It considers a joint action of the output and advertising in shaping the closed-loop and the open-loop equilibria with N competitors in a dynamic competitive setting.

Details

Kybernetes, vol. 48 no. 3
Type: Research Article
ISSN: 0368-492X

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Article

Moumita Chel and Vivekananda Mukherjee

This paper aims to analyse the phenomenon of race to the bottom in a federation and provides answer to the question why developing countries are more prone to race to the…

Abstract

Purpose

This paper aims to analyse the phenomenon of race to the bottom in a federation and provides answer to the question why developing countries are more prone to race to the bottom competition than developed countries.

Design/methodology/approach

The paper considers a two-stage game where, in the first stage, two regional governments in a federation choose tax rate on mobile capital employed in its own region by maximising its regional per capita income, and in the second stage, a representative firm chooses capital and labour employment in the two regions by maximising total profit. As capital is mobile across regions, tax policy chosen by any region affects other region. From strategic interaction between the regional governments, the authors derive Nash equilibrium tax rates. Comparing Nash equilibrium with Pareto optimum outcome, race to the bottom is characterised.

Findings

The paper finds that federations with poorer endowment of capital are more prone to the race to the bottom outcome. The result is robust to the introduction of different types of asymmetries between the regions and a centrally executed revenue equalisation scheme. Whilst it hints at the fact that capital accumulation can naturally solve the race to the bottom problem, it identifies the presence of an equalisation scheme and equity concern at the regions to weaken the impact of capital accumulation in achieving such an outcome.

Originality/value

The role of capital endowment in the race to the bottom literature in fiscal federalism has previously been ignored. This has serious implications for developing countries like China and India where states compete with each other for attracting private capital in their own jurisdictions.

Details

Indian Growth and Development Review, vol. 12 no. 1
Type: Research Article
ISSN: 1753-8254

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Abstract

Details

Freight Transport Modelling
Type: Book
ISBN: 978-1-78190-286-8

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Article

Lei Xue, Changyin Sun and Fang Yu

The paper aims to build the connections between game theory and the resource allocation problem with general uncertainty. It proposes modeling the distributed resource…

Abstract

Purpose

The paper aims to build the connections between game theory and the resource allocation problem with general uncertainty. It proposes modeling the distributed resource allocation problem by Bayesian game. During this paper, three basic kinds of uncertainties are discussed. Therefore, the purpose of this paper is to build the connections between game theory and the resource allocation problem with general uncertainty.

Design/methodology/approach

In this paper, the Bayesian game is proposed for modeling the resource allocation problem with uncertainty. The basic game theoretical model contains three parts: agents, utility function, and decision-making process. Therefore, the probabilistic weighted Shapley value (WSV) is applied to design the utility function of the agents. For achieving the Bayesian Nash equilibrium point, the rational learning method is introduced for optimizing the decision-making process of the agents.

Findings

The paper provides empirical insights about how the game theoretical model deals with the resource allocation problem uncertainty. A probabilistic WSV function was proposed to design the utility function of agents. Moreover, the rational learning was used to optimize the decision-making process of agents for achieving Bayesian Nash equilibrium point. By comparing with the models with full information, the simulation results illustrated the effectiveness of the Bayesian game theoretical methods for the resource allocation problem under uncertainty.

Originality/value

This paper designs a Bayesian theoretical model for the resource allocation problem under uncertainty. The relationships between the Bayesian game and the resource allocation problem are discussed.

Details

International Journal of Intelligent Computing and Cybernetics, vol. 10 no. 1
Type: Research Article
ISSN: 1756-378X

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Abstract

Details

Cognitive Economics: New Trends
Type: Book
ISBN: 978-1-84950-862-9

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Book part

Edwin L.-C. Lai

In this chapter I put forward a framework to help us understand the underlying sources of national policy failures regarding intellectual property rights (IPR) protection…

Abstract

In this chapter I put forward a framework to help us understand the underlying sources of national policy failures regarding intellectual property rights (IPR) protection, the need for international coordination, and how the coordination should be done. I also analyze whether global harmonization of IPR standards is necessary or sufficient for achieving globally welfare-maximizing policies. Then I move on to analyze the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which is a mighty effort to coordinate IPR policies across member countries of the World Trade Organization (WTO). I discuss what TRIPS was supposed to do and what it has actually achieved, with reference to my theoretical framework. I explain that it is desirable for IPR to be included in world trade talks and be negotiated along with other trade issues. I offer analyses on the extensions of the basic model by introducing political economy and trade barriers, as well as allowing countries to discriminate against foreign firms. Finally, I comment on further potential extensions such as introduction of foreign direct investment (FDI) or licensing, parallel imports, cumulative innovations, subject matter of protection and costs of implementation. The main thrust of the basic model is that, provided that there is free trade and non-discrimination of foreign firms, there exist positive cross-border externalities as a country strengthens its IPR protection, since it raises the profits of foreign firms and the welfare of foreign consumers without causing any deadweight loss on foreign soil. This implies that national governments tend to provide too little IPR protection compared with the global optimum. The model also implies that a country with higher innovative capability and larger domestic market would provide stronger IPR. Thus, it is natural for the South to protect IPR less than the North in the absence of international coordination. These basic results largely continue to hold under various extensions.

Details

Intellectual Property, Growth and Trade
Type: Book
ISBN: 978-1-84950-539-0

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Article

Asli D.A. Tasci, Robertico Croes and Jorge Bartels Villanueva

The aim of the current study is to use a city case study from Costa Rica to evaluate the Nash equilibrium point and Anna Karenina Principle in relation to community-based…

Abstract

Purpose

The aim of the current study is to use a city case study from Costa Rica to evaluate the Nash equilibrium point and Anna Karenina Principle in relation to community-based tourism (CBT), collaborative destination marketing (CDM) and strategic destination branding (SDB) – all of which require similar facilitators and suffer from similar inhibitors.

Design/methodology/approach

The study combines a case study approach with in-depth interviewing of local business stakeholders as the aim is to reveal a specific event in a specific setting.

Findings

In-depth interviews with local tourism product and service suppliers provided evidence that numerous deficiencies stem from the lack of collaborative destination marketing and branding in Costa Rica. This undermines the Nash equilibrium, namely successful CBT marketing and branding.

Research limitations/implications

The results support the theory that the success (i.e. Nash equilibrium) or the failure situation (i.e. Anna Karenina Principle) in CBT – similar to CDM and SDB – depend on similar critical factors, including a shared vision, all-inclusive stakeholder involvement and participation; and cooperation and collaboration.

Practical implications

Results indicated an urgent need for governments, donor organizations, universities and NGOs to partner to collectively develop campaigns and educational and training programs for human and social capital development.

Originality/value

This study integrates sustainable tourism, tourism development, poverty alleviation, community-based tourism (CBT), collaborative destination marketing, strategic destination branding (SDB), Nash equilibrium and Anna Karenina Principle to explain the successful application of community-based tourism, which has not been previously reported.

Details

Worldwide Hospitality and Tourism Themes, vol. 6 no. 3
Type: Research Article
ISSN: 1755-4217

Keywords

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