Insights on the Theory of Robust Games

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F61989100%3A27510%2F25%3A10254410" target="_blank" >RIV/61989100:27510/25:10254410 - isvavai.cz</a>
Result on the web
<a href="https://link.springer.com/article/10.1007/s10614-023-10486-0" target="_blank" >https://link.springer.com/article/10.1007/s10614-023-10486-0</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1007/s10614-023-10486-0" target="_blank" >10.1007/s10614-023-10486-0</a>

Result language
angličtina
Original language name
Insights on the Theory of Robust Games
Original language description
A robust game is a distribution-free model to handle ambiguity generated by a bounded set of possible realizations of the values of players' payoff functions. The players are worst-case optimizers and a solution, called robust-optimization equilibrium, is guaranteed by standard regularity conditions. The paper investigates the sensitivity to the level of uncertainty of this equilibrium focusing on robust games with no private information. Specifically, we prove that a robust-optimization equilibrium is an epsilon-Nash equilibrium of the nominal counterpart game, where epsilon measures the extra profit that a player would obtain by reducing his level of uncertainty. Moreover, given an epsilon-Nash equilibrium of a nominal game, we prove that it is always possible to introduce uncertainty such that the epsilon-Nash equilibrium is a robust-optimization equilibrium. These theoretical insights increase our understanding on how uncertainty impacts on the solutions of a robust game. Solutions that can be extremely sensitive to the level of uncertainty as the worst-case approach introduces non-linearity in the payoff functions. An example shows that a robust Cournot duopoly model can admit multiple and asymmetric robust-optimization equilibria despite only a symmetric Nash equilibrium exists for the nominal counterpart game.
Czech name
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Czech description
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Type
J<sub>imp</sub> - Article in a specialist periodical, which is included in the Web of Science database
CEP classification
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OECD FORD branch
50202 - Applied Economics, Econometrics

Project
<a href="/en/project/GA23-06282S" target="_blank" >GA23-06282S: Evolutionary economic dynamics with finite populations: Modeling and applications</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year
2025
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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