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Dynamics of a Duopoly Game in R&D Efforts with Asymmetric Information

In: Economic Growth, Prosperity and Sustainability in the Economies of the Balkans and Eastern European Countries

Author

Listed:
  • Georges Sarafopoulos

    (Democritus University of Thrace)

  • Despoina Terzopoulou

    (Democritus University of Thrace)

  • Kosmas Papadopoulos

    (Democritus University of Thrace)

Abstract

The present study extends Sarafopoulos and Terzopoulou (Sarafopoulos and Terzopoulou in Global, regional and local perspectives on the economies of Southeastern Europe. Springer, 2023b) to the case where the players of the game do not have the same information when choosing strategies. We suppose that the bounded rational player is characterized by knowing some information about the next time R&D efforts of its opponent. We examine the existence and stability of equilibria of this system. In order to show the effect of the speed of adjustment of the bounded rational player on the dynamics of the system, numerical simulations are carried out. We show that the speed of adjustment of the bounded rational player may change the stability of the Nash equilibrium and cause a structure to behave chaotically. Finally, an attempt is made to control the chaotic behavior.

Suggested Citation

  • Georges Sarafopoulos & Despoina Terzopoulou & Kosmas Papadopoulos, 2024. "Dynamics of a Duopoly Game in R&D Efforts with Asymmetric Information," Springer Proceedings in Business and Economics, in: Maria Mavri & Patricia Ikouta Mazza & Anastasios Karasavvoglou & Persefoni Polychronidou (ed.), Economic Growth, Prosperity and Sustainability in the Economies of the Balkans and Eastern European Countries, pages 129-143, Springer.
  • Handle: RePEc:spr:prbchp:978-3-031-58437-4_7
    DOI: 10.1007/978-3-031-58437-4_7
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    More about this item

    Keywords

    Discrete dynamical system; Heterogenous expectations; Stability; Chaotic behavior; R&D;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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