Quantum Nash Equilibria for Games with Unitary Strategies: Existence in Mixed Strategies, an Entanglement Threshold, and a Stylized Interbank Liquidity Game
Kim Khanh Nguyen
Abstract
We study non-cooperative games in which each player chooses a unitary operator on a separable Hilbert space, possibly infinite-dimensional. We first show that no non-trivial subset of the unitary group is convex in the linear sense, so equilibrium existence cannot be obtained by applying a fixed-point theorem to convex sets of unitaries. We then prove existence of a Nash equilibrium in mixed strategies, i.e. Borel probability measures on strong-operator-topology (SOT) compact sets of unitaries, using the Fan-Glicksberg theorem. For the two-player Eisert-Wilkens-Lewenstein (EWL) quantum Prisoner's Dilemma we derive the payoff function in closed form and prove that the quantum profile (Q, Q) is a Nash equilibrium if and only if the entanglement parameter satisfies γ ≥ γ * = arcsin (t − r)/(t − s). Finally, we interpret the game as a reduced-form interbank liquidity game and show that, under an explicit payoff condition, the payoff of the Pareto-best pure equilibrium drops discontinuously from r to p as γ falls below γ *. The financial interpretation is stylized; its limits are stated explicitly.