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

DOI10.1016/J.COR.2013.07.010MaRDI QIDQ336830zbMATH OpenOpenAlexFDO

Authors Pekka Malo, Anton Frantsev, Ankur Sinha, Kalyanmoy Deb

Publication date 10 November 2016

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

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)

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.

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Cited in

(20)

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• Incentive-based fault-tolerant cooperative payoff design in weakly acyclic games
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• Solving bi-level optimization problems in engineering design using kriging models
• Committing to correlated strategies with multiple leaders
• 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
• Approximated set-valued mapping approach for handling multiobjective bilevel problems
• Metaheuristics for bilevel optimization: a comprehensive review
• 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
• Bi-level programming approach to optimal strategy for vendor-managed inventory problems under random demand
• Online prediction of extreme conditional quantiles via B-spline interpolation
• Multilevel decision-making: a survey
• Bilevel optimization: theory, algorithms, applications and a bibliography
• Approximate bilevel optimization with population-based evolutionary algorithms
• 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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