On Games and Cost of Change

Abstract

Many mathematical models of strategic play or better choice overlook adjustment costs. Rather often, the modeler's concern is just with improvement of objectives. This optic doesn't quite fit agents somewhat attached to status quo. They reason whether moving to another state be worth their while. For that, the realized gains must outweigh the inconveniences of the move. This note offers some observations on the fact that change usually entails cost.

On the application of the SCD semismooth* Newton method to variational inequalities of the second kind

“…Based on the general results from [2], the authors in [14] considered an evolutionary Cournot-Nash equilibrium, where in the course of time the players (producers) adjust their productions to respond adequately to changing external parameters. Following [2], however, each change of production is generally associated with some expenses, called costs of change. In this way one obtains a generalized equation (1.1) which has to be solved repeatedly in each selected time step.…”

On the application of the semismooth* Newton method to variational inequalities of the second kind

“…In [18] the authors considered an evolution process in an oligopolistic market, where the players (firms) adapt their strategies (productions) according to changing external parameters (input prices etc.). In their decisions, however, they must take into account that each change of production may be associated with some costs, see [4]. As derived in [18], the respective Cournot-Nash equilibrium at some time instant is governed by GE (1.2) with…”