Subgame Perfect Nash Equilibrium: A Learning Approach via Costs to Move

Francesco Caruso (), Maria Carmela Ceparano and Jacqueline Morgan
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Francesco Caruso: University of Naples Federico II

Dynamic Games and Applications, 2019, vol. 9, issue 2, No 5, 416-432

Abstract: Abstract In one-leader one-follower two-stage games, also called Stackelberg games, multiplicity of subgame perfect Nash equilibria (henceforth SPNEs) arises when the best reply correspondence of the follower is not a single-valued map. This paper concerns a new method to approach SPNEs which makes use of a sequence of SPNEs of perturbed games where the best reply correspondence of the follower is single-valued. The sequence is generated by a learning method where the payoff functions of both players are modified subtracting a term that represents a physical and behavioral cost to move and which relies on the proximal point methods linked to the Moreau–Yosida regularization. Existence results of SPNEs approached via this method are provided under mild assumptions on the data, together with numerical examples and connections with other methods to construct SPNEs.

Keywords: Non-cooperative game; Stackelberg game; Subgame perfect Nash equilibrium; Learning method; Cost to move; Proximal point method (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s13235-018-0277-3

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