Game Theory and Economic Behavior

Until the beginning of 1950s, the economic theory in general, and the microeconomic theory in particular, relied totally on the deterministic character of economic phenomena. Nowadays microeconomic models are built on uncertain elements in a competitive environment that is affected by risk and uncertainty. Two centuries later, traditional microeconomics, also known as derived microeconomics, continues to be based on Adam Smith’s theory. As individuals are interested in participating in commercial transactions, but for these to take place effectively, two essential principles should be observed: the principle of rationality and the principle of pure and perfect competition. The link between Brower’ fixed point theorems on the one hand and John von Neumann’s minimax theorem on the other hand enabled other authors such as McKenzie Arrow and Debreu Uzawa to state and demonstrate simpler but more general theorems than that of Abraham Wald. It was thus supposed that consumer preferences in a pool of possible consumptions are reflexive, transitive and all are comparable. Using game theory as a reference framework to represent the behavior of economic agents, microeconomics strongly renews its scope of investigation. The problem that arises is no longer linked to the study of perfectly competitive markets, but mostly to how agents coordinate their decisions in different strategic configuration circumstances. The use of such concepts as risk, antiselection or coordination limits has opened new scopes to economy in general and to microeconomics in particular.Game Theory, behavior of economic, traditional microeconomics, new microeconomics

THE BERTRAND MODEL OF THE SINGLE MARKET

Starting with the signification of the rationality hypothesis when the agentâ€(tm)s contentment is directly affected by the other agentsâ€(tm) decisions, the theory of games defines solutions for solving different situations of conflict. The economic actors have different behaviours of the Single Market. Oligopoly strategic behaviours were analysed by the Bertrand model. The two types revealed in the work show that strategic interactions are sensitive to the companiesâ€(tm) features, products and markets. Regarding the situation when we have an oligopoly competition, the companies make interdependent decisions in the environment affected by risk and uncertainty of the Single Market. For this reason it is an opportunity to study the structure of oligopoly type of of the Single Market with the aid of non â€" cooperative games.the Bertrand model, the Single Market, theory of games, Nash equilibrium

THE ECONOMIC CONVERGENCE IN THE EUROPEAN MODEL

The economic convergence consists in the very close, even identical evolutions of one variable in two different countries or regions. Within the European model, the macroeconomic and cohesion policies insure a good substantiation of the sustained economicEuropean model, economic convergence, economic growth

THE FREEDOMS OF MOVEMENT OF THE SINGLE MARKET

The European Single Market implies not only the free movement of goods and services, but also the free movement of production factors (the capital and the labor force).The liberalization of goods and services and of production factors movement has determined, on the short term, the appearance of some structural and specialization adjustment processes within the member countries, and on the long term a more efficient allocation of the production factors, an improvement of labor productivity and positive effects in the field of labor force employment. According to the neoclassical theory, the labor force migrates from regions with low wages and low profit rates, to regions having high wages and high profit rate. Thus, the production factors are used in a more productive way. According to this theory, the factors mobility contributes to the equalization of the wages and to a better factors allocation. Issues such as structural funds, persons' freedom of movement, convergence could be turned into advantages by any member state, and especially by a new member state. From an economic perspective, the causes of labor force mobility, as a production factor, are: the price differences (wage differences, profit rates differences, interest rates differences) - according to neoclassical theory; income difference, meaning saving excess or insufficiency for the capital, according to Keynes approach; differences in the level of economic development, determining unequal changes, according to the monetarists. Romania has become a European Union member at January, the 1st, 2007. The accession road has been a long one, full of challenges, issues, but also satisfactions. The 1st of January has not been the end of a process, but the beginning of a new period for Romania's present history. The author will try to emphasize the freedoms of movement of the Single Market. The humanitarian reasons also determine the migration of the population; these are the refugees, the asylum solicitors, the persons having temporary protection or persons accepted for other humanitarian reasons.Economic Integration, Models of Trade with Imperfect Competition, Labor Market Interactions, freedom, movement

DECISIONS ET COMPETITIVITE SUR LE MARCHE UNIQUE EUROPEEN

L’un des traits importants du marché unique européen, a comme source le męme énoncé du principal objectif de l’intégration européenne ainsi que: l’harmonisation des niveaux du développement des Etats Membres et l’augmentation du niveau de vie dans l’ensemble de la communauté. Pour le marché unique européen, cet aspect se traduit par une permanente et soutenue augmentation de la demande. Cet ouvrage présente au début une analyse des éléments spécifiques du marché européen. Ensuite on identifie les opportunités et les risques au niveau macroéconomique adjointes aux perspectives du marché unique européen. Comme fondement on présente des stratégies du développement réalisables au niveau microéconomique que puissent assurer l’augmentation du niveau sur la compétitivité des sociétés sur le marché unique européen

DECISIONS ET COMPETITIVITE SUR LE MARCHE UNIQUE EUROPEEN

L'un des traits importants du marché unique européen, a comme source le même énoncé du principal objectif de l'intégration européenne ainsi que: l'harmonisation des niveaux du développement des Etats Membres et l'augmentation du niveau de vie dans l'ensemble de la communauté. Pour le marché unique européen, cet aspect se traduit par une permanente et soutenue augmentation de la demande. Cet ouvrage présente au début une analyse des éléments spécifiques du marché européen. Ensuite on identifie les opportunités et les risques au niveau macroéconomique adjointes aux perspectives du marché unique européen. Comme fondement on présente des stratégies du développement réalisables au niveau microéconomique que puissent assurer l'augmentation du niveau sur la compétitivité des sociétés sur le marché unique européen.marché unique européen, concurrence, compétitivité, opportunités, risques, les stratégies du développement, les décisions stratégiques au niveau microéconomique

EVOLUTIONARY THEORY AND THE MARKET COMPETITION

Evolutionary theory study of processes that transform economy for firms, institutions, industries, employment, production, trade and growth within, through the actions of diverse agents from experience and interactions, using evolutionary methodology. Evolutionary theory analyses the unleashing of a process of technological and institutional innovation by generating and testing a diversity of ideas which discover and accumulate more survival value for the costs incurred than competing alternatives.This paper presents study the behavior of the firms on the market used the evolutionary theory.The paper is to present in full the developments that have led to the re-assessment of theories of firms starting from the criticism on Coase's theory based on the lack of testable hypotheses and on non-operative definition of transaction costs. In the literature in the field studies on firms were allotted a secondary place for a long period of time, to date the new theories of the firm hold a dominant place in the firms’ economic analysis. In an article, published in 1937, Ronald H. Coase identified the main sources of the cost of using the market mechanism. The firms theory represent a issue intensively studied in the literature in the field, regarding the survival, competitiveness and innovation of firm on the market. The research of Nelson and Winter, “An Evolutionary Theory of Economic Change” (1982) is the starting point for a modern literature in the field which considers the approach of the theory of the firm from an evolutionary perspective. Nelson and Winter have shown that the “orthodox” theory, is objectionable primarily by the fact that the hypothesis regarding profit maximization has a normative character and is not valid in any situation. Nelson and Winter reconsidered their microeconomic analysis showing that excessive attention should not be paid to market equilibrium but rather to dynamic processes resulting from irreversible economic exchanges. This paper is focused on the market competition. In this market the firms must define its behaviour and formulate strategies for future actions affected by risk and uncertainty. The conclusions of the paper reveal that using a theory of the firm as reference framework regarding the representation of the economic agent’s on market structure, opens the way for a new field of investigation

THE THEORY OF THE FIRM AND THE EVOLUTIONARY GAMES

The neoclassical theory of the firm deals with the pattern of perfect competition, within which the perfect information available to economic agents provides instant allocation of production factors and access to economic goods. The Austrian School (C. Menger, L. von Mises, Hayek, etc.) supported the idea of minimal state intervention on the markets, bringing important conceptual developments on the theory of the firm. Hirschleifer (1982) put forward the model of social and institutional functioning, arguing that the game theory is able to predict the outcome of the collective behavior and the human characteristics necessary for building the respective institutions.The evolutionary theory provides the firm and the entrepreneur the recognition of the functions of innovation, of generating and exploiting information and of organizing and coordinating production. The evolutionary perspective of the firm assumes the existence of a body of knowledge that is acquired through and builds up the organizational memory, subsequently found in routines, all choices being made based on these routines (Nelson and Winter, 2002). The evolution of the firm is considered to be similar to natural selection, but unlike the classic market selection, the evolutionists suggest the existence of a plurality of selection media. The present research is structured as follows: a brief introduction into the theories of the firm, the second part of the paper analyzes the theories of the firm from an institutional, neo-institutional and evolutionary perspective. In the third part of the paper the evolutionary games are described and analyzed from the evolutionary perspective of the firm. The last part of the paper represents a study of the “hawk-dove” game dynamic replicator. The final conclusions of the paper show that the evolutionary theory brings valuable contributions to the foundation of explanations regarding economic phenomena, indicating new directions for advanced economic research

Economic Growth In The European Model

Within the European model, the macroeconomic and cohesion policies insure a good substantiation of the sustained economic growth. The achievement of the Single Market had positive effects upon the European economy as a whole, but these benefits have not been equally distributed among states, regions and social groups. The market is the most efficient mechanism of resource allocation within the economy, but it is not the tool insuring the distribution of the registered benefits. For this reason, the mechanisms of the cohesion policy can improve the tendencies of the economic activities concentration, once the economic integration process has intensified. The economic convergence consists in the very close, even identical evolutions of one variable in two different countries or regions. In this paper, the author proposes to explain the defining elements of the European model, emphasizing the connection between the convergence process and real economic growth process. In this sense, we will present the European model of regional growth, which contributes to the achievement of a real economic convergence process..Economic growth, European model, economic convergence.

THE BERTRAND MODEL OF THE SINGLE MARKET

Starting with the signification of the rationality hypothesis when the agent’s contentment is directly affected by the other agents’ decisions, the theory of games defines solutions for solving different situations of conflict. The economic actors have different behaviours of the Single Market. Oligopoly strategic behaviours were analysed by the Bertrand model. The two types revealed in the work show that strategic interactions are sensitive to the companies’ features, products and markets. Regarding the situation when we have an oligopoly competition, the companies make interdependent decisions in the environment affected by risk and uncertainty of the Single Market. For this reason it is an opportunity to study the structure of oligopoly type of of the Single Market with the aid of non – cooperative games