A simple framework for investigating the properties of policy games
AbstractThe paper extensively studies the static model of non-cooperative linear quadratic games in which a set of agents chooses their instruments strategically to minimize their linear quadratic criterion. We first derive the necessary and sufficient conditions for the existence of a Nash equilibrium as well as for multiple equilibria to arise. Furthermore, we study the general condition for policy neutrality and Pareto efficiency of the equilibrium by introducing a new concept of decisiveness.
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Conflict of interest; Nash equilibrium existence; multiplicity; policy invariance; controllability; Pareto efficiency;
Find related papers by JEL classification:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D6 - Microeconomics - - Welfare Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-HAP-2009-12-19 (Economics of Happiness)
- NEP-LTV-2009-12-19 (Unemployment, Inequality & Poverty)
- NEP-SOC-2009-12-19 (Social Norms & Social Capital)
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