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Perfect Uncontrollable Differential Games

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  • R. Cellini
  • L. Lambertini
  • G. Leitmann

Abstract

This paper analyses the time consistency of open-loop equilibria, in the cases of Nash and Stackelberg behaviour. We define a class of games where the strong time-consistency of the open-loop Nash equilibrium associates with the time consistency of the open-loop Stackelberg equilibrium. We label these games as perfect uncontrollable . We provide one example based on a model of oligopolistic competition in advertising efforts. We also present two oligopoly games where one property holds while the other does not, so that either (i) the open-loop Nash equilibrium is subgame perfect while the stackelberg one is time inconsistent, or (ii) the open-loop Nash and Stackelberg equilibria are only weakly time consistent.

Suggested Citation

  • R. Cellini & L. Lambertini & G. Leitmann, 2004. "Perfect Uncontrollable Differential Games," Working Papers 509, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:509
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    References listed on IDEAS

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    Cited by:

    1. Cellini, Roberto & Lambertini, Luca, 2007. "Time consistent fiscal policies in a Ramsey economy," Mathematical Social Sciences, Elsevier, vol. 53(3), pages 296-313, May.

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