Stability likelihood of coalitions in a two-stage cartel game: An estimation method |
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| Institution: | 1. Department of Economic Analysis and Finance, University of Castilla La-Mancha, Cobertizo de San Pedro Mártir, s/n, 45071 Toledo, Spain;2. Department of Quantitative Economics, University Complutense of Madrid, 28223 Madrid, Spain;3. Department of Finance, HEC Management School, University of Liège. Rue Louvrex 14, Bldg. N1, 4000 Liège, Belgium;1. School of Mathematics and Physics, University of South China, Hengyang, Hunan 421001, PR China;2. School of Mathematics and Statistics, Guizhou College of Finance and Economics, Luchongguan Rd 269, Guiyang 550004, PR China;3. School of Mathematics and Statistics, Central South University, Changsha, Hunan 410083, PR China;1. Faculty of Economics, Meijo University, 1-501 Shiogamaguchi, Tempaku-ku, Nagoya 468-8502, Japan;2. Faculty of Economics, Osaka University of Economics, 2-2-8 Osumi, Higashiyodogawa-ku, Osaka 533-8533, Japan;1. Bocconi University, Italy;2. IGIER, Italy;3. University of Bristol, UK;4. Sungkyunkwan University, Republic of Korea |
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| Abstract: | Existing formulations of a cartel game aim at finding stable coalitions, i.e. a coalition is labelled stable or not stable. Uncertainty about the underlying structure and/or parameter values gives rise to sensitivity or uncertainty analysis. In this paper we follow a probabilistic robustness concept: What is the probability a product, design or policy really fulfils the requirements or properties it is expected to. Following this idea, we introduce the concept of stability likelihood: What is the probability a coalition can be labelled as stable. Methods are described based on Monte Carlo Simulation and Directional Simulation to estimate such a probability and we illustrate the performance for several cases. |
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