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Mathematics
Article . 2026 . Peer-reviewed
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Genetic Algorithms for Pareto Optimization in Bayesian Cournot Games Under Incomplete Cost Information

Authors: Carfì David; Donato Alessia; Perrone Emanuele;

Genetic Algorithms for Pareto Optimization in Bayesian Cournot Games Under Incomplete Cost Information

Abstract

This paper develops a practical computational framework for the Bayesian Cournot model with bilateral incomplete cost information, where each player is uncertain about the opponent’s marginal cost, drawn from a continuous compact interval [c*, c*] with 0<c*<c*<∞. The infinite dimensionality of the functional strategy spaces (mappings from types to production quantities) renders analytical closed-form solutions infeasible in this continuous-type setting. To overcome this challenge, we restrict the strategy spaces to finite-dimensional differentiable sub-manifolds—specifically, one-parameter families of oscillatory functions (cosine, sine, and mixed forms). After suitable affine Q-rescaling to map the oscillatory range into the production interval [0, Q], and with parameter ranges satisfying α, β>(π/2)/c*, these curves ensure near-exhaustivity: the joint production map (α, β)↦(xα(s), yβ(t)) covers [0, Q]2 densely for every fixed cost pair (s, t), thereby recovering (up to density and closure) the full ex-post payoff space. We introduce the ex-post payoff mapping Φ(s, t, x, y)=(es(x, y)(t), ft(x, y)(s)), which collects every realizable payoff pair once nature draws the types and players select their strategies. The image of Φ defines the general payoff space of the game, and its non-dominated points constitute the general ex-post Pareto frontier—all efficient realized outcomes across type-strategy realizations, without dependence on private probability measures over types. Using multi-objective genetic algorithms, we numerically approximate this frontier (and selected collusive compromises) within the restricted but representative sub-manifolds. The resulting frontiers are computationally accessible, robust to parameter variations, and validated through hypervolume convergence, sensitivity analysis, and comparisons with NSGA-II, PSO and scalarization methods. The findings are significant because they provide decision-makers in oligopolistic markets (e.g., electric vehicles) with viable, implementable production policies that explore efficient trade-offs under genuine cost uncertainty, without requiring explicit forecasts of the opponent’s type distribution—a limitation of traditional expected-utility approaches. By focusing on ex-post efficiency, the method reveals belief-independent compromise solutions that may guide tacit coordination or collusive outcomes in real-world strategic settings.

Country
Italy
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Keywords

duopoly, normal form games, differentiable games, Bayesian models, multi-objective optimization, genetic algorithms, ex-post Pareto frontier, oscillatory strategies, incomplete information, Cournot competition

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
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