| Title: |
When Nash Meets Stackelberg. |
| Authors: |
Carvalho, Margarida1 (AUTHOR) carvalho@iro.umontreal.ca, Dragotto, Gabriele2 (AUTHOR) gdragotto@princeton.edu, Feijoo, Felipe3 (AUTHOR) felipe.feijoo@pucv.cl, Lodi, Andrea4 (AUTHOR) al748@cornell.edu, Sankaranarayanan, Sriram5 (AUTHOR) srirams@iima.ac.in |
| Source: |
Management Science. Oct2024, Vol. 70 Issue 10, p7308-7324. 17p. |
| Subject Terms: |
*Nash equilibrium, *Statistical decision making, *Game theory, *Integer programming, Bilevel programming |
| Abstract: |
This article introduces a class of Nash games among Stackelberg players (NASPs), namely, a class of simultaneous noncooperative games where the players solve sequential Stackelberg games. Specifically, each player solves a Stackelberg game where a leader optimizes a (parametrized) linear objective function subject to linear constraints, whereas its followers solve convex quadratic problems subject to the standard optimistic assumption. Although we prove that deciding if a NASP instance admits a Nash equilibrium is generally a Σ2p -hard decision problem, we devise two exact and computationally efficient algorithms to compute and select Nash equilibria or certify that no equilibrium exists. We use NASPs to model the hierarchical interactions of international energy markets where climate change aware regulators oversee the operations of profit-driven energy producers. By combining real-world data with our models, we find that Nash equilibria provide informative, and often counterintuitive, managerial insights for market regulators. This paper was accepted by Chung Piaw Teo, optimization. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.03418. [ABSTRACT FROM AUTHOR] |
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| Database: |
Business Source Complete |
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