Gian Italo Bischi

Equilibrium selection in a nonlinear duopoly game with adaptive expectations

Abstract We analyze a nonlinear discrete time Cournot duopoly game, where players have adaptive expectations. The evolution of expected outputs over time is generated by the iteration of a noninvertible two-dimensional map. The long-run behavior is characterized by multistability, that is, the presence of coexisting stable consistent beliefs, which correspond to Nash equilibria in the quantity space. Hence, a problem of equilibrium selection arises and the long run outcome strongly depends on the choice of the players’ initial beliefs. We analyze the basins of attraction and their qualitative changes as the model parameters vary. We illustrate that the basins might be nonconnected sets and reveal the mechanism which is responsible for this often-neglected kind of complexity. The analysis of the global bifurcations which cause qualitative changes in the topological structure of the basins is carried out by the method of critical curves.

Global Analysis of a Dynamic Duopoly Game with Bounded Rationality

A dynamic Cournot duopoly game, characterized by firms with bounded rationality, is represented by a discrete-time dynamical system of the plane. Conditions ensuring the local stability of a Nash equilibrium, under a local (or myopic) adjustment process, are given, and the influence of marginal costs and speeds of adjustment of the two firms on stability is studied. The stability loss of the Nash equilibrium, as some parameter of the model is varied, gives rise to more complex (periodic or chaotic) attractors. The main result of this paper is given by the exact determination of the basin of attraction of the locally stable Nash equilibrium (or other more complex bounded attractors around it), and the study of the global bifurcations that change the structure of the basin from a simple to a very complex one, with consequent loss of predictability, as some parameters of the model are allowed to vary. These bifurcations are studied by the use of critical curves, a relatively new and powerful method for the study of noninvertible two-dimensional maps.

Multistability and cyclic attractors in duopoly games

A dynamic Cournot duopoly game, whose time evolution is modeled by the iteration of a map T :Ox; yU!O r 1O yU ; r 2O xUU, is considered. Results on the existence of cycles and more complex attractors are given, based on the study of the one-dimensional map FOxUaO r 1 r 2UOxU. The property of multistability, i.e. the existence of many coexisting attractors (that may be cycles or cyclic chaotic sets), is proved to be a characteristic property of such games. The problem of the delimitation of the attractors and of their basins is studied. These general results are applied to the study of a particular duopoly game, proposed in M. Kopel [Chaos, Solitons & Fractals, 7 (12) (1996) 2031‐2048] as a model of an economic system, in which the reaction functions r1 and r2 are logistic maps. ” 2000 Elsevier Science Ltd. All rights reserved.

Multistability in a dynamic Cournot game with three oligopolists

The time evolution of a dynamic oligopoly game with three competing firms is modeled by a discrete dynamical system obtained by the iteration of a three-dimensional non-invertible map. For the symmetric case of identical players a complete analytical study of the stability conditions for the fixed points, which are Nash equilibria of the game, is given. For the situation of several coexisting stable Nash equilibria a numerical study of their basins of attraction is provided. This gives, evidence of the occurrence of global bifurcations at which the basins are transformed from simply connected sets into non-connected sets, a basin structure which is peculiar of non-invertible maps. The presence of several coexisting attractors (or multistability) is observed even when complex attractors exist. Two different routes to complexity are presented: one related to the creation of more and more complex attractors; the other related to the creation of more and more complex structures of the basins. Starting from the benchmark case of identical players, the effects of heterogeneous behavior of the players, causing the loss of the symmetry properties of the dynamical system, are investigated through numerical explorations.

Synchronization, intermittency and critical curves in a duopoly game

The phenomenon of synchronization of a two-dimensional discrete dynamical system is studied for the model of an economic duopoly game, whose time evolution is obtained by the iteration of a noninvertible map of the plane. In the case of identical players the map has a symmetry property that implies the invariance of the diagonal x1=x2, so that synchronized dynamics is possible. The basic question is whether an attractor of the one-dimensional restriction of the map to the diagonal is also an attractor for the two-dimensional map, and in which sense. In this paper, a particular dynamic duopoly game is considered for which the local study of the transverse stability, in a neighborhood of the invariant submanifold in which synchronized dynamics takes place, is combined with a study of the global behavior of the map. When measure theoretic, but not topological, attractors are present on the invariant diagonal, intermittency phenomena are observed. The global behavior of the noninvertible map is investigated by studying of the critical manifolds of the map, by which a two-dimensional region is defined that gives an upper bound to the amplitude of intermittent trajectories. Global bifurcations of the basins of attraction are evidenced through contacts between critical curves and basin boundaries.

Stability in chemostat equations with delayed nutrient recycling

The growth of a species feeding on a limiting nutrient supplied at a constant rate is modelled by chemostat-type equations with a general nutrient uptake function and delayed nutrient recycling. Conditions for boundedness of the solutions and the existence of non-negative equilibria are given for the integrodifferential equations with distributed time lags. When the time lags are neglected conditions for the global stability of the positive equilibrium and for the extinction of the species are provided. The positive equilibrium continues to be locally stable when the time lag in recycling is considered and this is proved for a wide class of memory functions. Computer simulations suggest that even in this case the region of stability is very large, but the solutions tend to the equilibrium through oscillations.

Symmetry‐breaking bifurcations and representativefirm in dynamic duopoly games

In this paper, we investigate the question of whether the assumption of the “representativeagent”, often made in economic modeling, is innocuous or whether it may be misleadingunder certain circumstances. In order to obtain some insight into this question, two dynamicCournot duopoly games are considered, whose dynamics are represented by discrete‐timedynamical systems. For each of these models, the dynamical behavior of the duopoly systemwith identical producers is compared to that with quasi‐identical ones, in order to study theeffects of small heterogeneities between the players. In the case of identical players, suchdynamical systems become symmetric, and this implies that synchronized dynamics can beobtained, governed by a simpler one‐dimensional model whose dynamics summarizes thecommon behavior of the two identical players. In both the examples, we show that a negligibledifference between the parameters that characterize the two producers can give dynamicevolutions that are qualitatively different from that of the symmetric game, i.e. a breakingof the symmetry can cause a noticeable effect. The presence of such bifurcations suggeststhat economic systems with quasi‐identical agents may evolve quite differently from systemswith truly identical agents. This contrasts with the assumption, very common in the economicliterature, that small heterogeneities of agents do not matter too much.

Analysis of global bifurcations in a market share attraction model

In this paper we demonstrate how the global dynamics of an economic model can be analyzed. In particular, as an application, we consider a market share attraction model widely used in the analysis of interbrand competition in marketing theory. We analyze the local and global dynamic properties of the resulting two-dimensional noninvertible dynamical system in discrete time. The main result of this paper is given by the study of some global bifurcations that change the structure of the attractors and their basins. These bifurcations are investigated by the use of critical curves, a powerful tool for the analysis of the global properties of noninvertible two-dimensional maps. ( 2000 Elsevier Science B.V. All rights reserved. JEL classixcation: E32; M30

Two-level volume rendering — fusing MIP and DVR

Presents a two-level approach for fusing direct volume rendering (DVR) and maximum-intensity projection (MIP) within a joint rendering method. Different structures within the data set are rendered locally by either MIP or DVR on an object-by-object basis. Globally, all the results of subsequent object renderings are combined in a merging step (usually compositing in our case). This allows us to selectively choose the most suitable technique for depicting each object within the data, while keeping the amount of information contained in the image at a reasonable level. This is especially useful when inner structures should be visualized together with semi-transparent outer parts, similar to the focus-and-context approach known from information visualization. We also present an implementation of our approach which allows us to explore volumetric data using two-level rendering at interactive frame rates.

PLANE MAPS WITH DENOMINATOR I: SOME GENERIC PROPERTIES

This paper is devoted to the study of some global dynamical properties and bifurcations of two-dimensional maps related to the presence, in the map or in one of its inverses, of a vanishing denominator. The new concepts of focal points and of prefocal curves are introduced in order to characterize some new kinds of contact bifurcations specific to maps with denominator. The occurrence of such bifurcations gives rise to new dynamic phenomena, and new structures of basin boundaries and invariant sets, whose presence can only be observed if a map (or some of its inverses) has a vanishing denominator.