Backwards-induction outcome in a quantum game

Abstract

In economics duopoly is a market dominated by two firms large enough to influence the market price. Stackelberg presented a dynamic form of duopoly that is also called `leader-follower' model. We give a quantum perspective on Stackelberg duopoly that gives a backwards-induction outcome same as the Nash equilibrium in static form of duopoly also known as Cournot's duopoly. We find two qubit quantum pure states required for this purpose.

Revised in the light of referee's comments. Latex, 16 pages, 2 figures, To appear in Phy. Rev. A

References in corpus (3)

• Quantum mechanics gives stability to a Nash equilibrium
• Quantum Cooperative Games
• Entanglement and Dynamic Stability of Nash Equilibria in a Symmetric Quantum Game

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