Nash Equilibrium in Retail Markets: Experimental Economic Analysis by Dhanya Sha

Nash Equilibrium in Retail Markets

by Dhanya Shankar K.S.

This study explores the practical implications of Nash equilibrium in retail markets through the lens of experimental economics and game theory. Using a controlled experimental setup, we analyze the strategic decision-making processes of two competing supermarkets, examining how pricing, promotions, and inventory decisions evolve in response to each other's actions. The study seeks to determine whether firms naturally gravitate toward equilibrium strategies or deviate due to factors such as bounded rationality, market shocks, or behavioral biases.Through simulated market conditions and real-world case studies, we investigate how firms adjust their strategies over time and whether their actions align with theoretical equilibrium predictions. The findings provide insights into the predictability of competitive behavior in retail markets and the extent to which experimental economics can enhance our understanding of strategic interactions. This research contributes to both theoretical and applied economics, offering valuable implications for pricing strategies, competition policy, and market efficiency.