Existence and Optimality of Nash Equilibria in Inventory
Abstract
This paper studies the stability and optimalityof a distributed consensus protocol for n-player repeated noncooperative games under incomplete information. At each stage, the players choose binary strategies and incur in a payoffmonotonically decreasing with the number of active players. The game is specialized to an inventory application, where fixed costsare shared among all retailers, interested in whether reordering or notfrom a common warehouse. The authors focus on Pareto optimality as a measure of coordination of reordering strategies, proving that there exists a unique Pareto optimal Nash equilibrium that verifies certain stability conditions.
