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A Forward-Looking Nash Game and Its Application to Achieving Pareto-Efficient Optimization

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DOI: 10.4236/am.2013.412218    3,163 Downloads   4,776 Views   Citations

ABSTRACT

Recognizing the fact that a player’s cognition plays a defining role in the resulting equilibrium of a game of competition, this paper provides the foundation for a Nash game with forward-looking players by presenting a formal definition of the Nash game with consideration of the players’ belief. We use a simple two-firm model to demonstrate its fundamental difference from the standard Nash and Stackelberg games. Then we show that the players’ belief functions can be regarded as the optimization parameters for directing the game towards a much more desirable equilibrium.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

Ren, J. , Wong, K. and Hou, J. (2013) A Forward-Looking Nash Game and Its Application to Achieving Pareto-Efficient Optimization. Applied Mathematics, 4, 1609-1615. doi: 10.4236/am.2013.412218.

References

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