What is Stackelberg Game
- A Stackelberg Game is a type of game in which there are two players: the Leader and the Follower.
- The Leader moves first and chooses a strategy, denoted by π. The Follower observes the Leader’s choice and then chooses their own strategy, denoted by γ(π).
- The goal of the Leader is to maximize their payoff, while the goal of the Follower is to minimize the payoff of the Leader.
- This type of game is named after Heinrich von Stackelberg, who introduced it in his 1934 book “Market Structure and Equilibrium”.
What is the difference between a Stackelberg Game and a Strong Stackelberg Equilibrium?
- Leader commits to a payoff maximizing strategy.
- Follower best responds.
- Follower breaks ties in favor of the leader–choosing the one with higher leader’s payoff.
Stationary Strong Stackelberg VS Strong Stackelberg
The main difference between them is that the Stationary Strong Stackelberg Equilibrium assumes that the leader commits to a stationary strategy that remains constant throughout the game, while the Strong Stackelberg Equilibrium allows for non-stationary strategies.
In the Strong Stackelberg Equilibrium, the leader can choose a different strategy in each period of time, but once it commits to a strategy in a given period, it cannot change it. This allows for more flexibility compared to the Stationary Strong Stackelberg Equilibrium, but also makes it more complex to analyze.