Two-Group Contests with Communication Within and Between Groups

Federico Quartieri and Ryusuke Shinohara

A chapter in Equilibrium Theory for Cournot Oligopolies and Related Games, 2016, pp 245-268 from Springer

Abstract: Abstract We consider a two-group contest game with weakest-link social composition functions and convex cost functions and prove the existence of a unique group-proof Nash equilibrium. Such a refinement of the Nash equilibrium prescribes the same communication possibilities as those required by a coalition-proof Nash equilibrium—in the precise sense of Bernheim et al. (J Econ Theory 42:1–12, 1987)—only among the contenders of the same group and between the two groups. We show how a fictitious game with “most inefficient fictitious contenders” can be constructed to prove the existence of a unique group-proof Nash equilibrium of the original two-group contest game. An example evidences that cautious arguments on the (twice) differentiability of cost functions must be used in such a construction.

Keywords: Nash Equilibrium; Payoff Function; Contest Success Function; General Nash Equilibrium; Nash Equilibrium Uniqueness (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spschp:978-3-319-29254-0_15

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DOI: 10.1007/978-3-319-29254-0_15

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