Equilibrium and Guaranteeing Solutions in Evolutionary Nonzero Sum Games

Kryazhimskiy, A.V. & Tarasyev, A.M. (1998). Equilibrium and Guaranteeing Solutions in Evolutionary Nonzero Sum Games. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-98-003

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Abstract

Advanced methods of theory of optimal guaranteeing control and techniques of generalized (viscosity, minimax) solutions of Hamilton-Jacobi equations are applied to nonzero game interaction between two large groups (coalitions) of agents (participants) arising in economic and biological evolutionary models. Random contacts of agents from different groups happen according to a control dynamical process which can be interpreted as Kolmogorov's differential equations in which coefficients describing flows are not fixed a priori and can be chosen on the feedback principle. Payoffs of coalitions are determined by the functionals of different types on infinite horizon. The notion of a dynamical Nash equilibrium is introduced in the class of control feedbacks. A solution feedbacks maximizing with the guarantee the own payoffs (guaranteeing feedback) is proposed. Guaranteeing feedbacks are constructed in the framework of the the theory of generalized solutions of Hamilton-Jacobi equations. The analytical formulas are obtained for corresponding value functions. The equilibrium trajectory is generated by guaranteeing feedbacks and its properties are investigated. The considered approach provides new qualitative results for the equilibrium trajectory in evolutionary models. The first striking result consists in the fact that the designed equilibrium trajectory provides better (in some bimatrix games strictly better) index values for both coalitions than trajectories which converge to static Nash equilibria (as, for example, trajectories of classical models with the replicator dynamics). The second principle result implies both evolutionary properties of the equilibrium trajectory: evolution takes place in the characteristic domains of Hamilton-Jacobi equations and revolution at switching curves of guaranteeing feedbacks. The third specific feature of the proposed solution is "positive" nature of guaranteeing feedbacks which maximize the own payoff unlike the "negative" nature of punishing feedbacks which minimize the opponent payoff and lead to static Nash equilibrium. The fourth concept takes into account the foreseeing principle in constructing feedbacks due to the multiterminal character of payoffs in which future |states are also evaluated. The fifth idea deals with the venturous factor of the equilibrium trajectory and prescribes the risk barrier surrounding it. These results indicate promising applications of theory of guaranteeing control for constructing solutions in evolutionary models.

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