Consistent conjectures in a dynamic model of non-renewable resource management
We consider a model of non-renewable resource extraction where players do not know their opponents’ utility functions and form conjectures on the behavior of others. Two forms of beliefs are introduced, one based on the state of the resource, the other on this state and on the others’ strategy (their consumption). We focus on consistent equilibria, where beliefs must be consistent with observed past plays. Closed form expressions of the optimal policies are derived. Comparisons are made with the full information benchmark case. With strategy and state based beliefs, the agents may behave more (respectively, less) aggressively than in the non-cooperative benchmark depending on the initial consumption level. When initial consumption is low, the optimal consumption path lies below that of the cooperative benchmark. We conclude the analysis by discussing the impact of public policies on the agents’ choice of consumption patterns, and the robustness of the results for the case of renewable resources.
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|Date of creation:||2014|
|Publication status:||Published in Annals of Operations Research, Springer Verlag, 2014, 220 (1), pp.159-180. <10.1007/s10479-012-1114-5>|
|Note:||View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01123096|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
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