Nonlinear Dynamics in a Cournot Duopoly with Different Attitudes towards Strategic Uncertainty

Figure 1

Starting from the red (resp., black) region, the first iterate is (0,𝑞₂), with 𝑞₂>0 (resp., (𝑞₁,0), with 𝑞₁>0). The yellow lines are the best reply curves of the two firms. The solid blue line represents points in which 𝑝=0. The dotted and dashed blue lines represent trajectories that start from the red and black regions, respectively, and end up to the Nash equilibrium. Parameter set: 𝑎=2.8, 𝑏=1, 𝑐=1, and 𝛾=0.7.