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Time Consistency and Optimal-Trajectory-Subgame Consistent Economic Optimization

  • David W. K. Yeung
  • Leon A. Petrosyan
Part of the Static & Dynamic Game Theory: Foundations & Applications book series (SDGTFA)

Abstract

The noncooperative games discussed in Chap.  2 fail to reflect all the facets of optimal behavior in n-person market games. In particular, equilibria in noncooperative games do not take into consideration Pareto efficiency or group optimality. Chapter  3 considers cooperation in economic optimization and it is shown that group optimality and individual rationality are two essential properties for cooperation. However, merely satisfying group optimality and individual rationality does not necessarily bring about a dynamically stable solution in economic cooperation because there is no guarantee that the agreed-upon optimality principle is fulfilled throughout the cooperative period. In this chapter we consider dynamically stable economic optimization.

Keywords

Cooperative Game Differential Game Cooperative Strategy Optimality Principle Time Consistency 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.SRS Consortium for Advanced Study in Cooperative Dynamic GamesHong Kong Shue Yan UniversityHong KongPeople’s Republic of China
  2. 2.Center of Game TheorySt. Petersburg State UniversitySaint PetersburgRussia
  3. 3.Faculty of Applied Mathematics and Control ProcessesSt. Petersburg State UniversitySaint PetersburgRussia

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