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2013 Nonlinear Dynamics in a Cournot Duopoly with Different Attitudes towards Strategic Uncertainty
Luciano Fanti, Luca Gori, Mauro Sodini
Abstr. Appl. Anal. 2013(SI41): 1-11 (2013). DOI: 10.1155/2013/323290

Abstract

This paper analyses the dynamics of a duopoly with quantity-setting firms and different attitudes towards strategic uncertainty. By following the recent literature on decision making under uncertainty, where the Choquet expected utility theory is adopted to allow firms to plan their strategies, we investigate the effects of the interaction between pessimistic and optimistic firms on economic dynamics described by a two-dimensional map. In particular, the study of the local and global behaviour of the map is performed under three assumptions: (1) both firms have complete information on the market demand and adjust production over time depending on past behaviours (static expectations—“best reply” dynamics); (2) both firms have incomplete information and production is adjusted over time by following a mechanism based on marginal profits; and (3) one firm has incomplete information on the market demand and production decisions are based on the behaviour of marginal profits, and the rival has complete information on the market demand and static expectations. In cases 2 and 3 it is shown that complex dynamics and coexistence of attractors may arise. The analysis is carried forward through numerical simulations and the critical lines technique.

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Luciano Fanti. Luca Gori. Mauro Sodini. "Nonlinear Dynamics in a Cournot Duopoly with Different Attitudes towards Strategic Uncertainty." Abstr. Appl. Anal. 2013 (SI41) 1 - 11, 2013. https://doi.org/10.1155/2013/323290

Information

Published: 2013
First available in Project Euclid: 26 February 2014

zbMATH: 1291.91153
MathSciNet: MR3147783
Digital Object Identifier: 10.1155/2013/323290

Rights: Copyright © 2013 Hindawi

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Vol.2013 • No. SI41 • 2013
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