Cournot game with incomplete information based on rank-dependent utility theory under a fuzzy environment

Abstract

In most existing literatures on Cournot game, game behaviour between players is based on the hypothesis that people are complete rationality. However, players’ decisions are often affected by their behavioural characteristic and psychology preference. Traditional Cournot model also doesn’t deal with ambiguous information. Based on rank-dependent utility theory, this paper develops an incomplete information Cournot game in an ambiguous decision environment, where the form of ambiguity is described by a set of fuzzy parameters, and behavioural pattern is reflected by means of emotional function in rank-dependent utility. Further, we investigate the Nash equilibrium quantity of each manufacture in this kind of fuzzy Cournot game with incomplete information. Finally, the proposed Cournot model is applied to a case study, and dynamic variation and sensitivity analysis of optimal quantity with respect to decision-maker’s behaviour pattern are discussed in detailed, which illustrates that the proposed Cournot model is more reasonable than traditional Cournot model.