An iterative method for detection of the collusive strategy in prisoner's dilemma game of electricity market

Abstract

AbstractThe aim of this article is to present a method, which is called the ‘iterative collusive strategy (CS) search method’, to detect the CS in prisoner's dilemma game in which there is collusive equilibrium. We apply this method to an example of two‐player prisoner's dilemma game and a numerical duopoly example to show its effectiveness. To simulate the electricity market models, we use this method with a local optimization algorithm. Then, we employ a hybrid technique by applying an agent‐based model to the iterative CS search method for improving the results and speeding up their convergence. We simulate an electricity market example with transmission constraint to test the effectiveness of local and hybrid iterative CS search methods. Simulation results show that both local and hybrid iterative CS search methods could successfully identify the CS; however, the hybrid iterative CS search method converges to the final results with less iteration numbers. © 2018 Institute of Electrical Engineers of Japan. Published by John Wiley & Sons, Inc.