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2012
ACM

Beyond myopic best response (in Cournot competition)

7 years 6 months ago
Beyond myopic best response (in Cournot competition)
A Nash Equilibrium is a joint strategy profile at which each agent myopically plays a best response to the other agents’ strategies, ignoring the possibility that deviating from the equilibrium could lead to an avalanche of successive changes by other agents. However, such changes could potentially be beneficial to the agent, creating incentive to act non-myopically, so as to take advantage of others’ responses. To study this phenomenon, we consider a non-myopic Cournot competition, where each firm selects whether it wants to maximize profit (as in the classical Cournot competition) or to maximize revenue (by masquerading as a firm with zero production costs). The key observation is that profit may actually be higher when acting to maximize revenue, (1) which will depress market prices, (2) which will reduce the production of other firms, (3) which will gain market share for the revenue maximizing firm, (4) which will, overall, increase profits for the revenue maximizing ...
Amos Fiat, Elias Koutsoupias, Katrina Ligett, Yish
Added 28 Sep 2012
Updated 28 Sep 2012
Type Journal
Year 2012
Where SODA
Authors Amos Fiat, Elias Koutsoupias, Katrina Ligett, Yishay Mansour, Svetlana Olonetsky
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