Consistent conjectures are optimal Cournot-Nash strategies in the meta-game

Abstract

In this paper, we investigate the properties of consistent conjectural variations equilibrium developed for a single-commodity oligopoly. Although, in general, the consistent conjectures are distinct from those of Cournot-Nash, we establish the following remarkable fact. Define a meta-game as such where the players are the same agents as in the original oligopoly but now using the conjectures as their strategies. Then the consistent conjectures of the original oligopoly game provide for the Cournot-Nash optimal strategies in the meta-game.

Keywords:

• Game theory
• consistent conjectural variations equilibrium (CVE)
• meta-game
• optimal Cournot-Nash strategies

AMS Subject Classifications:

• 90B50
• 91A05
• 91A06
• 91A40

Acknowledgements

The authors would like to express their profound gratitude to the three anonymous referees whose valuable comments and suggestions have helped greatly in improving the paper’s structure and the overall presentation.

Notes

No potential conflict of interest was reported by the authors.

† V.A. Bulavsky passed away in December 2015, when the manuscript was still waiting its first review.

Additional information

Funding

The research activity of the first and fourth authors was funded by the R&D Department of the Tecnológico de Monterrey (ITESM), Campus Monterrey, and by the SEP-CONACYT [project CB-2013-01-221676] (Mexico), while the third author was financially supported by the PAICYT [project number CE323-15] (Mexico).