We present a discrete n -person model of a dynamic strategic market game. We show that for some values of the discount factor the game possesses a stationary equilibrium where all the players make high bids. Within the class of all the high-bidding strategies we distinguish between two classes of more and less aggressive ones. We show that the set of discount factors for which these more aggressive strategies form equilibria shrinks as n goes to infinity. On the other hand, the analogous set for the less aggressive strategies grows to the whole interval (0,1) as n grows to infinity. Further we analyze the properties of the value function corresponding to these high-bidding equilibria. We also give some numerical examples contradicting some other properties that seem intuitive.
Applied Mathematics and Optimization – Springer Journals
Published: Apr 1, 2012
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