Chain equilibria in secure strategies

Abstract

In this paper we introduce a modification of the concept of Equilibrium in Secure Strategies (EinSS), which takes into account the non-uniform attitudes of players to security in non-cooperative games. In particular, we examine an asymmetric attitude of players to mutual threats in the simplest case, when all players are strictly ordered by their relation to security. Namely, we assume that the players can be reindexed so that each player i in his behavior takes into account the threats posed by players j > i but ignores the threats of players j < i provided that these threats are effectively contained by some counterthreats. A corresponding equilibrium will be called a Chain EinSS. The conceptual meaning of this equilibrium is illustrated by two continuous games that have no pure Nash equilibrium or (conventional) EinSS. The Colonel Blotto two-player game (Borel 1953; Owen 1968) for two battlefields with different price always admits a Chain EinSS with intuitive interpretation. The product competition of many players on a segment (Eaton, Lipsey 1975; Shaked 1975) with the linear distribution of consumer preferences always admits a unique Chain EinSS solution (up to a permutation of players). Finally, we compare Chain EinSS with Stackelberg equilibrium.