The Results in Competition Games with Quality Uncertainty by Using Monte Carlo Simulation

Abstract

The quality competition when there are more than
two firms in the market is so complicated, especially when quality
uncertainty appears in the market. However, both consumers’
utilities and the Nash equilibrium can be found by Monte Carlo
simulation and solved the results by using iterative dominance
methods. For the case that all consumers are informed, the
outcomes is the best point for social, so the other cases have some
bad effects coming from quality uncertainty that makes utilities of
consumers will be lower than the best point.