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Pure strategy Nash equilibria and the probabilistic prospects of Stackelberg players
Authors:William Stanford
Affiliation:University of Illinois at Chicago, Department of Economics (M/C 144), 601 S. Morgan St. (Room 706), Chicago, IL 60607-7121, USA
Abstract:We consider the set of all m×n bimatrix games with ordinal payoffs. We show that on the subset E of such games possessing at least one pure strategy Nash equilibrium, both players prefer the role of leader to that of follower in the corresponding Stackelberg games. This preference is in the sense of first-degree stochastic dominance by leader payoffs of follower payoffs. It follows easily that on the complement of E, the follower’s role is preferred in the same sense. Thus we see a tendency for leadership preference to obtain in the presence of multiple pure strategy Nash equilibria in the underlying game.
Keywords:Finite Stackelberg games   Stochastic dominance   Leader-follower preferences   Pure strategy Nash equilibrium
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