Index and stability in bimatrix games. A geometric-combinatorial approach. (Q2571106)

Shapley introduced the index of an equilibrium in a game and it is a useful tool with regards to strategic characterizations of equilibria and equilibrium components. The index can be used to describe a stability property of equilibrium components. This book provides a new, intuitive re-interpretation of the index and this re-interpretation does not require a background in algebraic topology. The author presents a review of the Lemke-Howson algorithm and index theory and shows how equilibrium components of arbitrary index can be constructed. The dual construction (a new geometric combinatorial construction) for non-degenerate bimatrix games gives a re-interpretation of the index and the Lemke-Howson algorithm in an intuitive way. It is shown that Sperner's Lemma is equivalent to the KKM lemma, a classical result by \textit{B. Knaster, C. Kuratowski} and \textit{S. Mazurkiewicz} [Fundam. Math. 14, 132--137 (1929; JFM 55.0972.01)] and to Brouwer's fixed point theorem. A new characterization of the index for equilibria in non-degenerate bimatrix games is provided in terms of strategic property. The dual construction is extended to outside option equilibrium components and this yields a new interpretation of the index for outside option equilibrium components that is very similar to a generalization of Sperner's Lemma which is in the literature referred to as the index lemma. The relationship between the index and hyperessentiality is investigated and it is shown that an outside option equilibrium component is hyperessential if and only if it has non-zero index.