Semicooperation under curved strategy spacetime

TL;DR

This paper models economic cooperation as a dynamic curved spacetime, revealing that traditional Euclidean geometry cannot adequately describe strategic interactions, and introduces a quantum gravity surface framework for analyzing firm cooperation.

Contribution

It introduces a novel curved spacetime model for strategic interactions, integrating quantum gravity concepts into economic cooperation analysis.

Findings

Cooperation occurs when strategies fall into each other's influence curvature.

Small firms' semi-cooperation is optimized using a Liouville-Feynman path integral.

Traditional Euclidean geometry fails to capture the feedback Nash equilibrium.

Abstract

Mutually beneficial cooperation is a common part of economic systems as firms in partial cooperation with others can often make a higher sustainable profit. Though cooperative games were popular in 1950s, recent interest in non-cooperative games is prevalent despite the fact that cooperative bargaining seems to be more useful in economic and political applications. In this paper we assume that the strategy space and time are inseparable with respect to a contract. Under this assumption we show that the strategy spacetime is a dynamic curved Liouville-like 2-brane quantum gravity surface under asymmetric information and that traditional Euclidean geometry fails to give a proper feedback Nash equilibrium. Cooperation occurs when two firms' strategies fall into each other's influence curvature in this strategy spacetime. Small firms in an economy dominated by large firms are subject to the influence of large firms. We determine an optimal feedback semi-cooperation of the small firm in this case using a Liouville-Feynman path integral method.