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arXiv · 1202.3885

Cooperative oligopoly games with boundedly rational firms

Paraskevas V. Lekeas·Giorgos Stamatopoulos
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Abstract

We analyze cooperative Cournot games with boundedly rational firms. Due to cogni- tive constraints, the members of a coalition cannot accurately predict the coalitional structure of the non-members. Thus, they compute their value using simple heuris- tics. In particular, they assign various non-equilibrium probability distributions over the outsiders' set of partitions. We construct the characteristic function of a coalition in such an environment and we analyze the core of the corresponding games. We show that the core is non-empty provided the number of firms in the market is sufficiently large. Moreover, we show that if two distributions over the set of partitions are related via first-order dominance, then the core of the game under the dominated distribution is a subset of the core under the dominant distribution.

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Paraskevas V. Lekeas, Giorgos Stamatopoulos. 2014-07-21. Cooperative oligopoly games with boundedly rational firms. https://doi.org/10.1007/s10479-014-1580-z

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