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The dynamics of Bowley's model with bounded rationality |
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| Institution: | 1. Dept. of Law, University of Naples ‘Federico II’, Italy;2. Dept. of Economics, Vienna University of Economics and Business Administration, Austria;3. Institute of Mathematics, National Academy of Sciences of Ukraine, Ukraine;1. School of Mathematics and Physics, Lanzhou Jiaotong University, Lanzhou, Gansu 730070, China;2. Institute of Decision and Game Theory, Lanzhou Jiaotong University, China |
| Abstract: | A nonlinear dynamical system which describe the time evolution of n-competitors in a Cournot game (Bowley's model) with bounded rationality is analyzed. The existence and stability of the equilibria of this system is studied. The stability conditions of the steady states for two and three players are explicitly computed. Complex behavior such as cycles and chaotic behavior are observed by numerical simulation. Delayed Bowley's with bounded rationality in monopoly is studied. We show that firms using bounded rationality with delay has a higher chance of reaching Nash equilibrium. |
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