Nash Equilibrium and Robust Stability in Dynamic Games: A Small-Gain Perspective

Posted by D. Daniel Sokol

Iasson Karafyllis (Department of Environmental Engineering, Technical University of Crete), Zhong-Ping Jiang (Department of Electrical and Computer Engineering, Polytechnic Institute of New York University) and George Athanasiou (TT Hellenic Postbank) develop Nash Equilibrium and Robust Stability in Dynamic Games: A Small-Gain Perspective.

ABSTRACT: This paper develops a novel methodology to study robust stability properties of Nash equilibrium points in dynamic games. Small-gain techniques in modern mathematical control theory are used for the first time to derive conditions guaranteeing uniqueness and global asymptotic stability of Nash equilibrium point for economic models described by functional difference equations. Specification to a Cournot oligopoly game is studied in detail to demonstrate the power of the proposed methodology.