Help with shared constraints (game theory)

In summary, the conversation discusses the concept of shared constraints in a non-cooperative game between two players. The players have individual objectives, but they are also limited by a shared constraint of x+y<=a. One approach to solving this problem is by forming a Lagrangian for each player and then solving for the first-order conditions. However, other approaches may be possible depending on the specific forms of the objectives f and g.
  • #1
ruzbayhhi
13
0
I've been struggling with shared constraints problems for a while now. I have a game between two players with a shared constraint. For example, player 1 is trying to maximize f(x,y) by choosing x, and player 2 is trying to maximize g(x,y) by choosing y. The players are competing in a non-cooperative game.
There is a shared constraint such that x+y<= a.

If I understand the source below correctly (p. 18 onward), what I should do is form a Lagrangian: L1 = f(x,y)+λ(a-x-y) and L2=g(x,y)+λ(a-x-y)? (i.e., λ for player 1 is the same as for player 2) and then solve the FOC? Is this the right way to approach this?

Reference: http://www.dis.uniroma1.it/~facchinei/didattica/giochi/Lettura_3.pdf
 
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  • #2
It is one way to approach it since both share this constraint. There might be other approaches if ##f,g## are known, i.e. have a certain form as linearity.
 

1. What is game theory and how is it used?

Game theory is a branch of mathematics and economics that studies strategic decision-making. It is used to analyze and predict the behavior of individuals or groups in competitive situations where the outcome of one's decision depends on the decisions of others.

2. What are shared constraints in game theory?

Shared constraints refer to limitations or restrictions that are imposed on all players in a game. These constraints can include limited resources, time constraints, or rules that all players must follow.

3. How can shared constraints affect the outcome of a game?

Shared constraints can greatly impact the outcome of a game as they limit the available options and strategies for all players. They can also create a sense of interdependence among players, where their decisions are influenced by the decisions of others.

4. What are some examples of shared constraints in game theory?

Examples of shared constraints in game theory include limited resources in a market, time constraints in a negotiation, and rules and regulations in a sporting event. These constraints can also be self-imposed, such as a group of friends agreeing to a set of rules for a game they are playing.

5. How can shared constraints be overcome or managed in game theory?

There are various strategies that can be used to overcome or manage shared constraints in game theory. These include cooperation and collaboration among players, finding creative solutions within the constraints, or changing the rules of the game to reduce the impact of the constraints.

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