Mean field game model for an advertising competition in a duopoly
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Publication:5072233
DOI10.1142/S0219198921500249zbMATH Open1489.91020arXiv2201.05182OpenAlexW4226431474MaRDI QIDQ5072233FDOQ5072233
Publication date: 26 April 2022
Published in: International Game Theory Review (Search for Journal in Brave)
Abstract: In this study, we analyze an advertising competition in a duopoly. We consider two different notions of equilibrium. We model the companies in the duopoly as major players, and the consumers as minor players. In our first game model we identify Nash Equilibria (NE) between all the players. Next we frame the model to lead to the search for Multi-Leader-Follower Nash Equilibria (MLF-NE). This approach is reminiscent of Stackelberg games in the sense that the major players design their advertisement policies assuming that the minor players are rational and settle in a Nash Equilibrium among themselves. This rationality assumption reduces the competition between the major players to a 2-player game. After solving these two models for the notions of equilibrium, we analyze the similarities and differences of the two different sets of equilibria.
Full work available at URL: https://arxiv.org/abs/2201.05182
Recommendations
Applications of game theory (91A80) Marketing, advertising (90B60) 2-person games (91A05) Consumer behavior, demand theory (91B42) Mean field games (aspects of game theory) (91A16)
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