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Equilibrium and Cooperation in Repeated Hierarchical Games

  • Leon PetrosyanEmail author
  • Yaroslavna Pankratova
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 11548)

Abstract

In the paper a two-level infinitely repeated hierarchical game with one player (center) \(C_0\) on the first level and \(S_1,\ldots , S_n\) subordinate players on the second is considered. On each stage of the game player \(C_0\) selects vector \(x=(x_1, \ldots ,x_n)\) from a given set X, in which each component represents vector of resources delivered by \(C_0\) to one of subordinate players, i.e. \(x_i =(x_{i1},\ldots ,x_{im})\). At the second level, \(S_i\), \(i=1,2,\ldots , n\), choose the controls \(y_i\in Y_i (x_i)\), where \(Y_i (x_i)\) depends upon the choice of player \(C_0\).

In this game, a set of different Nash equilibrium also based on threat and punishment strategies is obtained.

In one case, the center enforces special behavior of subordinate firms (vector of manufactured goods), threatening to deprive them of resources on the next steps if the subordinate firms refuse to implement the prescribed behavior.

In another case, the subordinate firms can force the center to use a certain resource allocation threatening to stop production.

Using different combinations of such behaviors on different stages of the game, we obtain a wide class of Nash equilibrium in the game under consideration.

The cooperative version of the game is also considered. The conditions are derived under which the cooperative behavior can be supported by Nash Equilibrium or Strong Nash Equilibrium (Nash Equilibrium stable against deviations of coalitions).

Keywords

Repeated hierarchical game Nash equilibrium Cooperation 

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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Saint Petersburg State UniversitySaint PetersburgRussia

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