An Analysis of the Behavior of OPEC With the Approach of Evolutionary Game Theory

Khakestari, Marzieh; Joleini, Sahar; Ameli, Ahmad

doi:10.29252/jemr.8.31.103

Volume 9, Issue 31 (3-2018) jemr 2018, 9(31): 103-130 | Back to browse issues page

‎ 10.29252/jemr.8.31.103

‎ 20.1001.1.22286454.1397.8.31.1.8

Mendeley

Zotero

RefWorks

Khakestari M, Joleini S, Ameli A. An Analysis of the Behavior of OPEC With the Approach of Evolutionary Game Theory. jemr 2018; 9 (31) :103-130
URL: http://jemr.khu.ac.ir/article-1-1413-en.html

An Analysis of the Behavior of OPEC With the Approach of Evolutionary Game Theory

Marzieh Khakestari ^*

¹, Sahar Joleini²

, Ahmad Ameli²

1- Kharazmi University , m.khakestari@khu.ac.ir
2- Kharazmi University

Abstract: (6188 Views)

This paper implements an approach to examine economic problems in which rational agents interact in dynamic markets. We use evolutionary game theory and agent-based modeling in tandem as a means to address intertemporal problems that display evolutionary attributes. This study examines the behavior of the Organization of Petroleum Exporting Countries (OPEC) in the global oil markets during the 1960s and 1970s, which sought to control global oil markets during this period.. To address this, a symmetric evolutionary game theory model is used to examine the behavior of OPEC agents as they learned to take control of their resources. An agent-based modeling approach employs computational power to implement the evolutionary game and provide detailed results. It is shown that OPEC’s behavior over the period is dependent on the growth of petroleum reserves within the member nations. Increasing realizations of natural resource reserves spur increased rates of learning and experimentation, and this enables the cartel to act cooperatively and capture control of global petroleum markets. If reserves are kept constant, OPEC lingers at a state in which the cartel does not come to dominate world oil markets.

Keywords: Evolutionary Game Theory, Agent-Based Modeling, OPEC

Full-Text [PDF 1165 kb] (4033 Downloads)

Type of Study: Applicable | Subject: رشد و توسعه و سیاست های کلان
Received: 2017/05/16 | Accepted: 2018/05/8 | Published: 2018/06/13

References

1. Abdoli, GH. (2012). Game theory and its applications (incomplete, evolutionary and collaborative information games) . Agah Publication, Tehran, First Edition.

2. Abdoli, GH., Majed V. ( 2012). Analyzing OPEC Members Behavior: A Cooperation Game Approach. Jemr, 2 (7), 27-50.

3. Abdoli, GH., Majed, V. ( 2009). Application of Fiorin's theory in OPEC's review with the approach of the theory of repeted games. Qurterly Energy Economics Review, 6(20), 33-56

4. Abdoli, GH., Nakhoda, M. (2016). Policy making in international cooperation, a repeated game theory approach and it application to OPEC. Public Plicy, 2(1), 9-27.

5. Abrishami, H., Golestani, SH. (2003). Review OPEC's Behavior in oil Monopoly and How to Divide the Benefits of Oil Trade Between them.Iranian Journal of Trade Studies(IJTC), 8(31), 59-89.

6. Alhajji, A.F. & Huettner D. (2000). Opec and other commodity cartels, Energy policy 28, 1151-1164. [DOI:10.1016/S0301-4215(00)00095-1]

7. Alsmiller, R. & Horwedel J.E. (1985). A model of the world oil market with an OPEC cartel. Energy, 1089-1102. [DOI:10.1016/0360-5442(85)90024-6]

8. Asgharpoor Masouleh, A.R., Amiri, S. ( 2013). Agent-based Modeling. Second National Conference on Sociology and Social Sciences.

9. Axelrod, R. & Tesfatsion, L. (2006). A Guide for Newcomers to Agent-based Modeling in the Social Sciences. In Handbook of Computational Economics: Agent- Based omputational Economics, Vol. 2, edited by Leigh Tesfatsion and K.L. Judd. Amsterdam: North-Holland. [DOI:10.1016/S1574-0021(05)02044-7]

10. Brown, J.S., & Vincent, T.L. (1987). A theory for the evolutionary game. Theoretical Population Biology, 31, 140-166. [DOI:10.1016/0040-5809(87)90026-8]

11. Castillo, L. & Dorao, C. (2013). Decision-making in the oil and gas projects based on game theory: Conceptual process design. Energy Conversion and Management, 9, 48-55. [DOI:10.1016/j.enconman.2012.09.029]

12. Dawid, H. (2007). Evolutionary game dynamics and the analysis of agent-based imitation models: The long run, the medium run, and the importance of global analysis. Journal of Economic Dynamics & Control, 31, 2108-2133. [DOI:10.1016/j.jedc.2007.01.002]

13. Gintis, H. (2009). Game Theory Evolving: A Problem-Centered Introduction to Modeling Strategic Interaction. Princeton, NJ: Princeton University Press. [DOI:10.2307/j.ctvcm4gjh]

14. Hofbauer, J. & Sigmund, K. (1998). Evolutionary Games and Population Dynamics. Cambridge: Cambridge University Press. [DOI:10.1017/CBO9781139173179]

15. Khakestari M, Nazari Adli N. (2015). The Impact of Sanction on the Oil Incomes in Oil Markets: Cooperative Game Approach. Jemr, 6 (21) :193-219. [DOI:10.18869/acadpub.jemr.6.21.193]

16. Khatami , S., shakibaee, A. (2017). Analysis of the Evolutionary Game Theory among Iran & Saudi Arabia in the Context of Genetic Algorithm. Quarterly Jornal of Economical Modeling, 11(38), 29-56.

17. Maynard Smith, J. 1982. Evolution and the Theory of Games. Cambridge University Press, [DOI:10.1017/CBO9780511806292]

18. Cambridge.

19. Samuelson, L.(1997). Evolutionary Games and Equilibrium Selection. Cambridge, MA: The MIT Press.

20. Shenoy, P. P. (1980). A three-person cooperative game formulation of the world oil market. Applied Mathematical Modelling, 301-307. [DOI:10.1016/0307-904X(80)90199-7]

21. Shenoy, P. P. (1980). A two-person non-zero-sum game model of the world oil market. Applied Mathematical Modelling, 295-300. [DOI:10.1016/0307-904X(80)90198-5]

22. Vega-Redondo, F. (1996). Evolution, Games, and Economic Behaviour. New York: Oxford University Press. [DOI:10.1093/0198774729.001.0001]

23. Weibull, J. W.( 1995). Evolutionary Game Theory. Cambridge, MA: The MIT Press.

24. Wood, A. D., Mason, C. F., Finnoff , D. (2016). OPEC, the Seven Sisters, and Oil Market Dominance: An Evolutionary Game Theory and Agent-Based Modeling Approach. Journal of Economic Behavior and Organization . 132. Part B. 66-78 [DOI:10.1016/j.jebo.2016.06.011]