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Dynamic Exploitation of Myopic Best Response

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  • Burkhard C. Schipper

    (University of California, Davis)

Abstract

How can a rational player manipulate a myopic best response player in a repeated two-player game? We show that in games with strategic substitutes or strategic complements the optimal control strategy is monotone in the initial action of the opponent, in time periods, and in the discount rate. As an interesting example outside this class of games we present a repeated “textbook-like” Cournot duopoly with nonnegative prices and show that the optimal control strategy involves a cycle.

Suggested Citation

  • Burkhard C. Schipper, 2019. "Dynamic Exploitation of Myopic Best Response," Dynamic Games and Applications, Springer, vol. 9(4), pages 1143-1167, December.
    • Handle: RePEc:spr:dyngam:v:9:y:2019:i:4:d:10.1007_s13235-018-0289-z
    DOI: 10.1007/s13235-018-0289-z
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    Cited by:

    1. Masiliūnas, Aidas, 2019. "Overcoming inefficient lock-in in coordination games with sophisticated and myopic players," Mathematical Social Sciences, Elsevier, vol. 100(C), pages 1-12.

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