Abstract
This paper studies oligopolistic equilibria when not all firms behave in a Nashian fashion. The Kantian firms act according to norms of behavior that reflect the Kantian categorical imperative. We introduce the concepts of Exclusive Kant-Nash Equilibrium and Inclusive Kant-Nash Equilibrium to study such situations. Our model formalises Sen’s conjecture that in actual situations people often do not follow the selfish strategy because of the Kantian norm of behavior.
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Notes
- 1.
The main idea of tenable strategy block is that “when people interact in familiar settings, social conventions usually develop so that people tend to disregard alternatives outside the convention. For rational players to usually restrict attention to a block of conventional strategies, no player should prefer to deviate from the block when others are likely to act conventionally and rationally inside the block.”
- 2.
See Smith (1790[2002]), Part III, Chapter V, p. 190. There is a large literature on norms of behavior and on their origins, including the evolutionary view (see e.g. Bergstrom, 1995).
- 3.
See Bertrand Russell’s A History of Western Philosophy. As explained by Russell (1945, p. 737) ‘There are two sorts of imperative: the hypothetical imperative, which says “You must do so-and-so if you wish to achieve such-and-such and end”; and the categorical imperative, which says that a certain kind of action is objectively necessary, without regard to any end.’
- 4.
Another approach to the possible avoidance of the prisoner’s dilemma outcome would be to change the payoff matrix by allowing each player to care about the other’s player. This approach was suggested by Rescher (1975). However, Waymark (1978) points out that Rescher’s method might turn a game without the prisoner’s dilemma properties into a prisoner’s dilemma game. Waymark admits that his technical note does not go beyond the narrow technical issues.
- 5.
Roemer does not claim that this counterfactual alternative outcome is what an agent should expect would necessarily materialize if he were to deviate.
- 6.
These concepts were first introduced by Ghosh and Long (2015) in a model of voluntary contribution to a public good.
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Acknowledgements
The author thanks Mardi Dungey, Scott Finley, Guy Laroque, Vinh Nguyen and Eytan Sheshinsky for helpful comments on an earlier version of this paper.
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Van Long, N. (2016). Kant-Nash Equilibria in a Quantity-Setting Oligopoly. In: von Mouche, P., Quartieri, F. (eds) Equilibrium Theory for Cournot Oligopolies and Related Games. Springer Series in Game Theory. Springer, Cham. https://doi.org/10.1007/978-3-319-29254-0_12
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