“…Section 7 concludes the paper with a summary and directions for further research. Figure 1 gives a pictorial representation of what has come to be known as the Stackelberg game [56]. It is a model of the market structure whereby a single leader is able to gain increased profits by anticipating the reactions of the rest of the market participants (known as the "followers").…”
This paper introduces an evolutionary algorithm for the solution of a class of hierarchical ("leader-follower") games known as Equilibrium Problems with Equilibrium Constraints (EPECs). In one manifestation of such games, players at the upper level who assume the role of leaders, are assumed to act non cooperatively to maximise individual payoffs. At the same time, each leader's payoffs are constrained not only by their competitor's actions but also by the behaviour of the followers at the lower level which manifests in the form of an equilibrium constraint. By a redefinition of the selection criteria used in evolutionary methods, the paper demonstrates that the solution for such games can be found via a simple modification to a standard evolutionary multiobjective algorithm. We give a proposed algorithm (NDEMO) and illustrate it with numerical examples drawn from both the transportation systems management literature and the electricity generation industry underlying the applicability of NDEMO in multidisciplinary contexts.
“…Section 7 concludes the paper with a summary and directions for further research. Figure 1 gives a pictorial representation of what has come to be known as the Stackelberg game [56]. It is a model of the market structure whereby a single leader is able to gain increased profits by anticipating the reactions of the rest of the market participants (known as the "followers").…”
This paper introduces an evolutionary algorithm for the solution of a class of hierarchical ("leader-follower") games known as Equilibrium Problems with Equilibrium Constraints (EPECs). In one manifestation of such games, players at the upper level who assume the role of leaders, are assumed to act non cooperatively to maximise individual payoffs. At the same time, each leader's payoffs are constrained not only by their competitor's actions but also by the behaviour of the followers at the lower level which manifests in the form of an equilibrium constraint. By a redefinition of the selection criteria used in evolutionary methods, the paper demonstrates that the solution for such games can be found via a simple modification to a standard evolutionary multiobjective algorithm. We give a proposed algorithm (NDEMO) and illustrate it with numerical examples drawn from both the transportation systems management literature and the electricity generation industry underlying the applicability of NDEMO in multidisciplinary contexts.
“…In discussing defense against nuclear strikes, and in addition to using a dual reformulation from max-min to max-max, Owen (1969, p. 491) states: "It is, of course, assumed that the defender must deploy his hardware first; the attacker, in full knowledge of this deployment, will act next." In Appendix B, we establish the relationship between our twosided model (JD-MINMAX) in JOINT DEFENDER and a game invented by von Stackelberg (1952). These seminal contributions, achieved solely with classical mathematics (i.e., with no computers) but only by asserting many simplifying assumptions (such as continuous activities) still offer prescient insight.…”
Section: Discussionmentioning
confidence: 99%
“…The models in JOINT DEFENDER's basic model comprises an instance of a Stackelberg game (von Stackelberg 1952;see Luo et al 1996, pp. 11-15 for an overview), which we represent as a bilevel integer linear program (e.g., Moore and Bard 1990).…”
We describe JOINT DEFENDER, a new two-sided optimization model for planning the pre-positioning of defensive missile interceptors to counter an attack threat. In our basic model, a defender pre-positions ballistic missile defense platforms to minimize the worst-case damage an attacker can achieve; we assume that the attacker will be aware of defensive pre-positioning decisions, and that both sides have complete information as to target values, attacking-missile launch sites, weapon system capabilities, etc. Other model variants investigate the value of secrecy by restricting the attacker’s and/or defender’s access to information. For a realistic scenario, we can evaluate a completely transparent exchange in a few minutes on a laptop computer, and can plan near-optimal secret defenses in seconds. JOINT DEFENDER’s mathematical foundation and its computational efficiency complement current missile-defense planning tools that use heuristics or supercomputing. The model can also provide unique insight into the value of secrecy and deception to either side. We demonstrate with two hypothetical North Korean scenarios.
“…Stackelberg game (interaction model) is based on leaders (a dominant player type) who simultaneously choose a strategy first, and then regarding the strategy chosen by their leaders, the followers act to maximize their payoffs [40]. Similarly, we will use a mechanism, in which a leader (usually a project leader is responsible for assigning tasks to followers), aims to maximize her profit subject to all of other team members (followers).…”
Abstract. We introduce the novel concept of applying economic mechanism design to software development process, and aim to find ways to adjust the incentives and disincentives of the software organization to align them with the motivations of the participants in order to maximize the delivered value of a software project. We envision a set of principles to design processes that allow people to be self motivated but constantly working toward project goals. The resulting economic mechanism will rely on game theoretic principles (i.e. Stackelberg games) for leveraging the incentives, goals and motivation of the participants in the service of project and organizational goals.
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