Subgame-perfect equilibrium in a two-stage monopoly market game

1997 ◽  
Vol 3 (3) ◽  
pp. 328-328
Author(s):  
Eleanor T. von Ende ◽  
Klaus G. Becker
Keyword(s):  
Subgame Perfect Equilibrium ◽  
Market Game ◽  
Perfect Equilibrium ◽  
Two Stage ◽  
Monopoly Market

scholarly journals Conditional loyalty and its implications for pricing

2021 ◽  
Vol 1 (10) ◽  
Author(s):  
Massimo A. De Francesco
Keyword(s):  
Market Power ◽  
Imperfect Information ◽  
Subgame Perfect Equilibrium ◽  
Price Setting ◽  
Perfect Equilibrium ◽  
Two Stage ◽  
Uniform Price

AbstractBertrand–Edgeworth competition has recently been analyzed under imperfect buyer mobility, as a game in which, once prices are chosen, a static buyer subgame (BS) is played where the buyers choose which seller to visit (see, e.g., Burdett et al. in J Political Econ 109:1060–1085, 2001). Our paper considers a symmetric duopoly where two buyers play a two-stage BS of imperfect information after price setting. An “assessment equilibrium” of the BS is shown to exist in which, with prices at the two firms sufficiently close to each other, the buyers keep loyal if previously served. Conditional loyalty is proved to increase the duopolists’ market power: at the corresponding subgame perfect equilibrium of the entire game, the uniform price is higher than that corresponding to the equilibrium of the BS in which the buyers are persistently randomizing.

Government Positions for Sale - A Model of Grand Corruption

2012 ◽  
Vol 14 (2) ◽  
pp. 1-25 ◽  
Author(s):  
Hans J. Czap ◽  
Kanybek D. Nur-tegin
Keyword(s):  
Developing Countries ◽  
Subgame Perfect Equilibrium ◽  
Backward Induction ◽  
Perfect Equilibrium ◽  
Two Stage ◽  
Stage Game ◽  
The Given

This paper develops a model for a particular type of grand corruption often encountered in developing countries, namely, the sale of government positions by autocratic rulers. A two-stage game is considered, where the autocrat moves first to maximize his revenue from the sale of positions in the cabinet by choosing a price that must be paid by interested politicians. The latter become bureaucrats who maximize their utility from bribe revenues for the given price set by the president. Backward induction yields subgame-perfect equilibrium levels of corruption of the president and bureaucrats. A key insight from this analysis is that conventional tools of fighting corruption become ineffective when corruption at the very top is ignored. The model is distinctive in its treatment of individual moral costs of being corrupt and in its consideration of a revolutionary constraint on the autocrat's choices.

Step-by-Step: The Subgame-Perfect Equilibrium

2020 ◽  
pp. 125-140
Author(s):  
Manfred J. Holler ◽  
Barbara Klose-Ullmann
Keyword(s):  
Subgame Perfect Equilibrium ◽  
Perfect Equilibrium

Quantifying Commitment in Nash Equilibria

2019 ◽  
Vol 21 (02) ◽  
pp. 1940011
Author(s):  
Thomas A. Weber
Keyword(s):  
Nash Equilibrium ◽  
Normal Form ◽  
Nash Equilibria ◽  
Dynamic Game ◽  
Subgame Perfect Equilibrium ◽  
Canonical Extension ◽  
Perfect Equilibrium ◽  
Form Game ◽  
Normal Form Game ◽  
The Given

To quantify a player’s commitment in a given Nash equilibrium of a finite dynamic game, we map the corresponding normal-form game to a “canonical extension,” which allows each player to adjust his or her move with a certain probability. The commitment measure relates to the average overall adjustment probabilities for which the given Nash equilibrium can be implemented as a subgame-perfect equilibrium in the canonical extension.

Field Centipedes

2009 ◽  
Vol 99 (4) ◽  
pp. 1619-1635 ◽  
Author(s):  
Ignacio Palacios-Huerta ◽  
Oscar Volij
Keyword(s):  
Field Experiment ◽  
Laboratory Experiment ◽  
Experimental Evidence ◽  
Subgame Perfect Equilibrium ◽  
Perfect Equilibrium ◽  
Previous Evidence ◽  
Chess Players

In the centipede game, all standard equilibrium concepts dictate that the player who decides first must stop the game immediately. There is vast experimental evidence, however, that this rarely occurs. We first conduct a field experiment in which highly ranked chess players play this game. Contrary to previous evidence, our results show that 69 percent of chess players stop immediately. When we restrict attention to Grandmasters, this percentage escalates to 100 percent. We then conduct a laboratory experiment in which chess players and students are matched in different treatments. When students play against chess players, the outcome approaches the subgame-perfect equilibrium. (JEL C72, C93)

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