HOW TO SELECT A DUAL NASH EQUILIBRIUM

The paper analyzes situations, generalizing the duopoly problem, where two identical players are allowed with two control variables each, al l of them linked through two non-strategic private constraints. Four d ual equilibria are then obtained when each agent selects one leading v ariable to optimize and adjusts the other, and these equilibria are co mpared in a meta-game. For a simplified class of continuous games with linear constraints, it is shown that one symmetric dual equilibrium d ominates the others and is the only perfect equilibrium of the meta-ga me. The latter result holds locally for all quasi-concave utility func tions and globally for all homogeneous ones, always keeping linear con straints. However, it is no longer valid in discrete games where the i mplicit constraints are not linear. (C) 1995 Academic Press, Inc.