In this chapter, we analyze the properties of evolutionary switching models for oligopoly games, where boundedly rational agents can follow different behavioral rules (or heuristics) to update their production through repeated adaptive decisions. In particular, we focus on well-known heuristics such as best reply with naive expectations, local monopolistic approximation and gradient dynamics on marginal profits. These heuristics are characterized by the property that Nash equilibria are fixed points of the corresponding dynamic processes. The population of firms in the oligopoly is subdivided into fractions of adopters of the different heuristics. Firms are allowed to switch over time between different behavioral rules according to profit-driven evolutionary pressure. The chapter examines some specific examples of evolutionary systems. Coexistence of heterogeneous behaviors as well as oscillatory time patterns are obtained as possible outcomes of the proposed evolutionary models
Bischi, G. I., Lamantia, F., Radi, D., Evolutionary oligopoly games with heterogeneous adaptive players, in Corchón L.-C, C. L., Marini M. A, M. M. A. (ed.), Handbook of Game Theory and Industrial Organization, Volume I: Theory, Edward Elgar Publishing Ltd., Cheltenham, UK 2018: 1 343- 370. 10.4337/9781785363283.00019 [https://hdl.handle.net/10807/237974]
Evolutionary oligopoly games with heterogeneous adaptive players
Radi, DavideUltimo
2018
Abstract
In this chapter, we analyze the properties of evolutionary switching models for oligopoly games, where boundedly rational agents can follow different behavioral rules (or heuristics) to update their production through repeated adaptive decisions. In particular, we focus on well-known heuristics such as best reply with naive expectations, local monopolistic approximation and gradient dynamics on marginal profits. These heuristics are characterized by the property that Nash equilibria are fixed points of the corresponding dynamic processes. The population of firms in the oligopoly is subdivided into fractions of adopters of the different heuristics. Firms are allowed to switch over time between different behavioral rules according to profit-driven evolutionary pressure. The chapter examines some specific examples of evolutionary systems. Coexistence of heterogeneous behaviors as well as oscillatory time patterns are obtained as possible outcomes of the proposed evolutionary modelsI documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.