Finding optimal strategies in a multi-period multi-leader-follower Stackelberg game using an evolutionary algorithm
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Publication:336830
DOI10.1016/J.COR.2013.07.010zbMATH Open1348.91082arXiv1307.6246OpenAlexW2006911191MaRDI QIDQ336830FDOQ336830
Authors: Pekka Malo, Anton Frantsev, Ankur Sinha, Kalyanmoy Deb 
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
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Approximation methods and heuristics in mathematical programming (90C59) Hierarchical games (including Stackelberg games) (91A65)
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- Game theory based evolutionary algorithms: a review with Nash applications in structural engineering optimization problems
- Solving the bilevel facility location problem under preferences by a Stackelberg-evolutionary algorithm
- Bi-level programming DEA approach for efficiency evaluation: a case study of Indian electronics retail stores
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- Defense coordination in security games: equilibrium analysis and mechanism design
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