Finding optimal strategies in a multi-period multi-leader-follower Stackelberg game using an evolutionary algorithm

DOI10.1016/J.COR.2013.07.010zbMATH Open1348.91082arXiv1307.6246OpenAlexW2006911191MaRDI QIDQ336830FDOQ336830

Anton Frantsev, Kalyanmoy Deb, Pekka Malo, Ankur Sinha

Publication date: 10 November 2016

Published in: Computers \& Operations Research (Search for Journal in Brave)

Abstract: Stackelberg games are a classic example of bilevel optimization problems, which are often encountered in game theory and economics. These are complex problems with a hierarchical structure, where one optimization task is nested within the other. Despite a number of studies on handling bilevel optimization problems, these problems still remain a challenging territory, and existing methodologies are able to handle only simple problems with few variables under assumptions of continuity and differentiability. In this paper, we consider a special case of a multi-period multi-leader-follower Stackelberg competition model with non-linear cost and demand functions and discrete production variables. The model has potential applications, for instance in aircraft manufacturing industry, which is an oligopoly where a few giant firms enjoy a tremendous commitment power over the other smaller players. We solve cases with different number of leaders and followers, and show how the entrance or exit of a player affects the profits of the other players. In the presence of various model complexities, we use a computationally intensive nested evolutionary strategy to find an optimal solution for the model. The strategy is evaluated on a test-suite of bilevel problems, and it has been shown that the method is successful in handling difficult bilevel problems.

Full work available at URL: https://arxiv.org/abs/1307.6246

zbMATH Keywords

game theoryevolutionary algorithmbilevel optimizationStackelberg gamesmulti-leader-follower problem

Mathematics Subject Classification ID

Approximation methods and heuristics in mathematical programming (90C59) Hierarchical games (including Stackelberg games) (91A65)

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Cited In (18)

• Evolutionary aspects of spatial prisoner's dilemma in a population modeled by continuous probabilistic cellular automata and genetic algorithm.
• The maximum clique interdiction problem
• BI-LEVEL PROGRAMMING APPROACH TO OPTIMAL STRATEGY FOR VENDOR-MANAGED INVENTORY PROBLEMS UNDER RANDOM DEMAND
• Incentive-based fault-tolerant cooperative payoff design in weakly acyclic games
• Stackelberg-Nash equilibrium for multilevel programming with multiple followers using genetic algorithms
• Committing to correlated strategies with multiple leaders
• Game theory based evolutionary algorithms: a review with Nash applications in structural engineering optimization problems
• Bilevel Optimization: Theory, Algorithms, Applications and a Bibliography
• Approximate Bilevel Optimization with Population-Based Evolutionary Algorithms
• Metaheuristics for bilevel optimization: a comprehensive review
• Approximated set-valued mapping approach for handling multiobjective bilevel problems
• Evolutionary algorithm for bilevel optimization using approximations of the lower level optimal solution mapping
• Game theoretic analysis of pricing and vertical cooperative advertising of a retailer-duopoly with a common manufacturer
• Online prediction of extreme conditional quantiles via B-spline interpolation
• Bi-level programming DEA approach for efficiency evaluation: A case study of Indian electronics retail stores
• Multilevel decision-making: a survey
• Defense coordination in security games: equilibrium analysis and mechanism design
• Competition of pricing and service investment between IoT-based and traditional manufacturers

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