Quadropoly Game with Heterogeneous Players
Keywords:
Bounded rational, Adaptive strategy , Naive , Equilibrium , Discrete Dynamical System , Jacobian matrix , Schur Cohn CriterionAbstract
This paper explores the heterogeneous quadropoly game, aiming to examine the stability conditions of equilibrium points and the emergence of complex dynamics. Four firms with distinct strategies—two naive, one adaptive, and one bounded rational—are modeled within a linear discrete-time dynamical system. Using the Jacobian matrix and Schur-Cohn criterion, we find boundary equilibrium points to be locally unstable, while Nash equilibrium stability depends on the adaptive firm’s adjustment rate. This research extends traditional oligopoly models, providing insights into strategic decision-making and profit maximization in complex oligopoly markets.
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