Abstract. Lookahead search is perhaps the most natural and widely used game playing strategy. Given the practical importance of the method, the aim of this paper is to provide a theoretical performance examination of lookahead search in a wide variety of applications.To determine a strategy play using lookahead search, each agent predicts multiple levels of possible re-actions to her move (via the use of a search tree), and then chooses the play that optimizes her future payoff accounting for these re-actions. There are several choices of optimization function the agents can choose, where the most appropriate choice of function will depend on the specifics of the actual game -we illustrate this in our examples. Furthermore, the type of search tree chosen by computationally-constrained agent can vary. We focus on the case where agents can evaluate only a bounded number, k, of moves into the future. That is, we use depth k search trees and call this approach k-lookahead search.We apply our method in five well-known settings: industrial organization (Cournot's model); AdWord auctions; congestion games; valid-utility games and basic-utility games; cost-sharing network design games. We consider two questions. First, what is the expected social quality of outcome when agents apply lookahead search? Second, what interactive behaviours can be exhibited when players use lookahead search?Myopic game playing (whose corresponding equilibria are Nash equilibria), where each player can only foresee the immediate effect of her own actions, is the special case of 1-lookahead search. Thus, for the first question, it is natural to ask whether social outcomes improve when players use more foresight than in myopic behaviour. The answer depends on the game played: (i) For the Cournot game, applying 2-lookahead leads to a 12.5% increase in output and a 5.5% increase in social surplus compared with myopic competition. Similar bounds arise as the length k of foresight increases.(ii) In AdWord auctions (or generalized second-price auctions), we show that 2-lookahead game playing results in outcomes that are always optimal to within a constant factor; in contrast, myopic game play can produce arbitrarily poor equilibrium outcomes.(ii) For congestion games, as with myopic game playing, lookahead search leads to constant factor qualitative guarantees. (iv) For basic-utility games, on the other hand, whilst myopic game playing always leads to constant factor approximations, additional foresight can lead to arbitrarily bad solutions! (v) In a simple Shapley network design game, qualitative guarantees improve with the length of foresight. Regarding the second question, a variety of interesting game playing characteristics also arise with lookahead search. Stackelberg leader-follower behaviours can be induced when the players have asymmetric computational power. For example, Stackelberg equilibria can be produced in the Cournot game. Lookahead search can also generate "uncoordinated" cooperative behaviour!
Abstract. We consider the complexity of decision making with regards to predatory pricing in multimarket oligopoly models. Specifically, we present multimarket extensions of the classical single-market models of Bertrand, Cournot and Stackelberg, and introduce the War Chest Minimization Problem. This is the natural problem of deciding whether a firm has a sufficiently large war chest to win a price war. On the negative side we show that, even with complete information, it is hard to obtain any multiplicative approximation guarantee for this problem. Moreover, these hardness results hold even in the simple case of linear demand, price, and cost functions. On the other hand, we give algorithms with arbitrarily small additive approximation guarantees for the Bertrand and Stackelberg multimarket models with linear demand, price, and cost functions. Furthermore, in the absence of fixed costs, this problem is solvable in polynomial time in all our models.
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