The dynamics of Bertrand model with bounded rationality

The paper considers a Bertrand model with bounded rational. A duopoly game is modelled by two nonlinear difference equations. By using the theory of bifurcations of dynamical systems, the existence and stability for the equilibria of this system are obtained. Numerical simulations used to show bifurcations diagrams, phase portraits for various parameters and sensitive dependence on initial conditions. We observe that an increase of the speed of adjustment of bounded rational player may change the stability of Nash equilibrium point and cause bifurcation and chaos to occur. The analysis and results in this paper are interesting in mathematics and economics.     

Speculative dynamics with bounded rationality learning

We study a linear model for a future market characterized by the presence of different classes of traders. In the market there are three classes of traders: rational traders, feedback traders and fundamentalist traders. Each class of traders is described by a trading strategy and by an information set about the fundamental. The analysis is developed under bounded rationality, rational traders forming expectations do not know the “true” model but believe in a misspecified model. The convergence of the learning activity to the Rational Expectations Equilibria of the model is analyzed. Two different learning mechanisms are studied: the Ordinary Least Squares algorithm and the Least Mean Squares algorithm. The main goal of the study is to analyze how the presence of different classes of traders in the market affects the robustness of the Rational Expectations Equilibria of the model with respect to bounded rationality learning. Moreover we verify the claim that bubbles and erratic behavior in the stock price dynamics may arise because of learning non-convergence to Rational Expectations Equilibria. The results show that if the Ordinary Least Squares algorithm is used by the agents to update beliefs, convergence to one of the two Rational Expectations Equilibria of the model is ensured only if there are positive feedback traders in the market. On the contrary, the Least Mean Squares algorithm guarantees convergence to the Rational Expectations Equilibria given an appropriate initial belief.     

An information theoretic model of bounded rationality

Bounded rationality forces an entity to divide its responses between those it does immediately (called adaptedness) and those it does with delay (called adaptability). Information theory is used to show how coding is related to the problem of choosing between adaptedness and adaptability.     

Study on a 3-dimensional game model with delayed bounded rationality

A nonlinear dynamic triopoly game model is studied based on the theory of nonlinear dynamics and previous researches in this paper. A lagged structure is introduced to the model to study stability conditions of the Nash equilibrium under a local adjustment process when players price their products with delayed bounded rationality. Numerical simulations are provided to demonstrate the complexity of system evolvement and influence of the strategy of delayed bounded rationality on system stability. We find that besides the lagged structure, suitable delayed parameters are also important factors to eliminate chaos or expand the stable region of the system, and various players’ adjustment parameters have different effect on stability of the system.     

Nonlinear delay monopoly with bounded rationality

The purpose of this paper is to study the dynamics of a monopolistic firm in a continuous-time framework. The firm is assumed to be boundedly rational and to experience time delays in obtaining and implementing information on output. The dynamic adjustment process is based on the gradient of the expected profit. The paper is divided into three parts: we examine delay effects on dynamics caused by one-time delay and two-time delays in the first two parts. Global dynamics and analytical results on local dynamics are numerically confirmed in the third part. Four main results are demonstrated. First, the stability switch from stability to instability occurs only once in the case of a single delay. Second, the alternation of stability and instability can continue if two time delays are involved. Third, the occurence of Hopf bifurcation is analytically shown if stability is lost. Finally, in a bifurcation process, there are a period-doubling cascade to chaos and a period-halving cascade to the equilibrium point in the case of two time delays if the difference between the two delays is large.     

Playing off-line games with bounded rationality

We study a two-person zero-sum game where players simultaneously choose sequences of actions, and the overall payoff is the average of a one-shot payoff over the joint sequence. We consider the maxmin value of the game played in pure strategies by boundedly rational players and model bounded rationality by introducing complexity limitations. First we define the complexity of a sequence by its smallest period (a nonperiodic sequence being of infinite complexity) and study the maxmin of the game where player 1 is restricted to strategies with complexity at most n and player 2 is restricted to strategies with complexity at most m. We study the asymptotics of this value and a complete characterization in the matching pennies case. We extend the analysis of matching pennies to strategies with bounded recall.     

Repeated congestion games with bounded rationality

We consider a repeated congestion game with imperfect monitoring. At each stage, each player chooses to use some facilities and pays a cost that increases with the congestion. Two versions of the model are examined: a public monitoring setting where agents observe the cost of each available facility, and a private monitoring one where players observe only the cost of the facilities they use. A partial folk theorem holds: a Pareto-optimal outcome may result from selfish behavior and be sustained by a belief-free equilibrium of the repeated game. We prove this result assuming that players use strategies of bounded complexity and we estimate the strategic complexity needed to achieve efficiency. It is shown that, under some conditions on the number of players and the structure of the game, this complexity is very small even under private monitoring. The case of network routing games is examined in detail.     

Complexity of games and bounded rationality

An attempt is made to propose a concept of limited rationality for choice junctions based on computability theory in computer science.

Starting with the observation that it is possible to construct a machine simulating strategies of each individual in society, one machine for each individual's preference structure, we identify internal states of this machine with strategies or strategic preferences. Inputs are possible actions of other agents in society thus society is effectively operating as a game generated by machines. The main result states that effective realization of game strategies bound by the “complexity of computing machines'.     

Competition analysis of a triopoly game with bounded rationality

A dynamic Cournot game characterized by three boundedly rational players is modeled by three nonlinear difference equations. The stability of the equilibria of the discrete dynamical system is analyzed. As some parameters of the model are varied, the stability of Nash equilibrium is lost and a complex chaotic behavior occurs. Numerical simulation results show that complex dynamics, such as, bifurcations and chaos are displayed when the value of speed of adjustment is high. The global complexity analysis can help players to take some measures and avoid the collapse of the output dynamic competition game.     

关于非凸的有限理性的稳定性

关于有限理性方面的文献, 大多数都是在满足凸性条件下研究有限理性的相关性质, 在一定程度上限制了其应用范围. 应用Ekeland变分原理, 减弱了有限理性模型的假设条件, 考虑在不满足凸性条件下的有限理性模型的稳定性问题. 具体给出了非凸的Ky Fan点问题解的稳定性, 非凸非紧的Ky Fan点问题解的稳定性, 非凸向量值函数Ky Fan点解的稳定性和非凸非紧向量值函数Ky Fan点解的稳定性. 作为应用, 还给出了非凸的n人非合作博弈有限理性模型解的稳定性和非凸的多目标博弈有限理性模型解的稳定性.     

On structural stability and robustness to bounded rationality

In this paper, we study the model M$M$, a parameterized class of “general games” together with an associated abstract rationality function. We prove that model M$M$ is structurally stable and robust to ?$?$-equilibria for “almost all” parameter values.     

有限理性下参数最优化问题解的稳定性

主要研究有限理性下参数最优化问题解的稳定性. 即在两类扰动即目标函数及可行集二者, 目标函数、可行集及参数三者分别同时发生扰动的情形下, 对参数最优化问题引入一个抽象的理性函数, 分别建立了参数最优化问题的有限理性模型M, 运用``通有'的方法, 得到了上述两种扰动情形下相应的有限理性模型M的结构稳定性及对\varepsilon-平衡(解)的鲁棒性, 即有限理性下绝大多数的参数最优化问题的解都 是稳定的, 并以一个例子说明所得的稳定性结果均是正确的.     

Structural stability and robustness to bounded rationality for non-compact cases

We study the model M consisting of “general games” with noncompact action space, together with an associated abstract rationality function. We prove that M is structurally stable and robust to ϵ-equilibria for “almost all” parameters. As applications, we investigate structural stability and robustness to bounded rationality for noncooperative games, multiobjective optimizations and fixed point problems satisfying existence and some continuity conditions. Specifically, we introduce concrete rationality functions for such three kinds of problems with both payoffs and strategy sets, objective functions and domain spaces, and correspondence and domain spaces as parameters, respectively, and show the generic structural stability and robustness to bounded rationality for the corresponding model Ms.     

Modeling networked systems using the topologically distributed bounded rationality framework

In networked systems research, game theory is increasingly used to model a number of scenarios where distributed decision making takes place in a competitive environment. These scenarios include peer‐to‐peer network formation and routing, computer security level allocation, and TCP congestion control. It has been shown, however, that such modeling has met with limited success in capturing the real‐world behavior of computing systems. One of the main reasons for this drawback is that, whereas classical game theory assumes perfect rationality of players, real world entities in such settings have limited information, and cognitive ability which hinders their decision making. Meanwhile, new bounded rationality models have been proposed in networked game theory which take into account the topology of the network. In this article, we demonstrate that game‐theoretic modeling of computing systems would be much more accurate if a topologically distributed bounded rationality model is used. In particular, we consider (a) link formation on peer‐to‐peer overlay networks (b) assigning security levels to computers in computer networks (c) routing in peer‐to‐peer overlay networks, and show that in each of these scenarios, the accuracy of the modeling improves very significantly when topological models of bounded rationality are applied in the modeling process. Our results indicate that it is possible to use game theory to model competitive scenarios in networked systems in a way that closely reflects real world behavior, topology, and dynamics of such systems. © 2016 Wiley Periodicals, Inc. Complexity 21: 123–137, 2016     

Continuous and discontinuous opinion dynamics with bounded confidence

In this paper, we study a continuous-time version of the Hegselmann-Krause opinion dynamics, which models bounded confidence by a discontinuous interaction. Intending solutions in the sense of Krasovskii, we provide results of existence, completeness and convergence to clusters of agents sharing a common opinion. For a deeper understanding of the role of the mentioned discontinuity, we study a class of continuous approximating systems, and their convergence to the original one. Our results indicate that their qualitative behavior is similar, and we argue that discontinuity is not an essential feature in bounded confidence opinion dynamics.     

Complex dynamics and multistability with increasing rationality in market games

In this work we study oligopoly models in which firms adopt decision mechanisms based on best response techniques with different rationality degrees. Firms are also assumed to face resource or financial constraints in adjusting their production levels, so that, from time to time, they can only increase or decrease their strategy by a bounded quantity. We consider different families of oligopolies of generic sizes, characterized by heterogeneous compositions with respect to the rationality degrees of firms. We analytically study the local stability of the equilibrium depending on the oligopoly size and composition and through numerical simulations we investigate the possible dynamics arising when trajectories do not converge toward the equilibrium. We show that in this case complex dynamics can arise, and this is due to both the loss of stability of the equilibrium and to the emergence of multiple attractors, with the stable steady state coexisting with a different, periodic or chaotic, attractor. In particular, we show that multistability phenomena occur when the overall degree of rationality of the oligopoly is increased. Finally, we investigate the effect of non-convergent dynamics on the realized profits.     

Application of duopoly multi-periodical game with bounded rationality in power supply market based on information asymmetry

In the power market, each entity is not completely rational when generate strategy, and the market information held by each entity is not exactly the same. In this paper, duopoly power providers with different selling adjustment structures are simplified from the actual grid background, where one provider can sell part of its power to another at contract price to store the power. Each provider is trying to maximize its profit by adjusting its power selling strategy. The process of evolutionary game with multi-periods bounded rational is established. One provider adjusts its selling strategy through the multi-periods market price and another through its multi-periods marginal profit. The quantity of power sold by each provider will tend to Nash equilibrium and how information asymmetry affects the stability of Nash equilibrium is analyzed through comparing dynamic power selling with and without information asymmetry. Information asymmetry has a great impact on one provider but not another. The numerical simulations also show that the information asymmetry will increase the stability region of the system. Different adjustment suggestions are proposed for different providers when information asymmetry occurs.     

Global dynamics of a nonlocal population model with age structure in a bounded domain:A non-monotone case

We study the global dynamics of a nonlocal population model with age structure in a bounded domain. We mainly concern with the case where the birth rate decreases as the mature population size become large. The analysis is rather subtle and it is inadequate to apply the powerful theory of monotone dynamical systems. By using the method of super-sub solutions, combined with the careful analysis of the kernel function in the nonlocal term, we prove nonexistence, existence and uniqueness of positive steady states of the model.Moreover, due to the mature individuals do not diffuse, the solution semiflow to the model is not compact. To overcome the difficulty of non-compactness in describing the global asymptotic stability of the unique positive steady state, we first establish an appropriate comparison principle. With the help of the comparison principle,we can employ the theory of dissipative systems to obtain the global asymptotic stability of the unique positive steady state. The main results are illustrated with the nonlocal Nicholson's blowflies equation and the nonlocal Mackey-Glass equation.