Mean Field Game Model for an Advertising Competition in a Duopoly

René Carmona, Gökçe Dayanlkll

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

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 Equilibrium (NE) between all the players. Next we frame the model to lead to the search for Multi-Leader-Follower Nash Equilibrium (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 two-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.

Original languageEnglish (US)
Article number2150024
JournalInternational Game Theory Review
Volume23
Issue number4
DOIs
StatePublished - Dec 1 2021

All Science Journal Classification (ASJC) codes

  • Computer Science(all)
  • Business and International Management
  • Statistics, Probability and Uncertainty

Keywords

  • duopoly competition
  • Mean field games
  • stackelberg equilibrium

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