Complex dynamics and synchronization of a duopoly game with bounded rationality

A dynamic Cournot game characterized by players with bounded rationality is modeled by two non-linear difference equations. The stability of the equilibria of the discrete dynamical system is analyzed. As some parameters of the model are varied, the stability of Nash equilibrium is lost and the complex chaotic behavior occurs. Synchronization of two dynamic Cournot duopoly games are considered. In the case of identical players, such dynamical system becomes symmetric, and this implies that synchronized dynamics can be obtained by a simpler one-dimensional model whose dynamics summarizes the common behavior of the two identical players. (C) 2002 IMACS. Published by Elsevier Science B.V. All rights reserved.