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Optimal open loop cheating in dynamic reversed Linear Quadratic Stackelberg games

Author

Listed:
  • Thomas Vallée

    (LEN - Laboratoire d'économie de Nantes - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

  • Ch. Deissenberg

    (CEFI - Centre d'économie et de finances internationales - Université de la Méditerranée - Aix-Marseille 2 - CNRS - Centre National de la Recherche Scientifique)

  • T. Basar

    (UIUC - University of Illinois at Urbana-Champaign [Urbana] - University of Illinois System)

Abstract

The distinctive characteristic of a "Reversed Stackelberg Game" is that the leader plays twice, first by announcing his future action, second by implementing a possibly different action given the follower's reaction to his announcement. In such a game, if the leader uses the normal Stackelberg solution to find (and announce) his optimal strategy, there is a strong temptation for him to cheat, that is, to implement another action than the one announced. In this paper, within the framework of a standard discrete time Linear–Quadratic Dynamic Reversed Stackelberg game, we discuss and derive the best possible open-loop cheating strategy for an unscrupulous leader.

Suggested Citation

  • Thomas Vallée & Ch. Deissenberg & T. Basar, 1999. "Optimal open loop cheating in dynamic reversed Linear Quadratic Stackelberg games," Post-Print hal-03193664, HAL.
    • Handle: RePEc:hal:journl:hal-03193664
    DOI: 10.1023/A:1018982313949
    as

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    Cited by:

    1. Dawid, Herbert & Deissenberg, Christophe, 2005. "On the efficiency-effects of private (dis-)trust in the government," Journal of Economic Behavior & Organization, Elsevier, vol. 57(4), pages 530-550, August.
    2. Deissenberg, Christophe & Gonzalez, Francisco Alvarez, 2002. "Cheating for the common good in a macroeconomic policy game," Journal of Economic Dynamics and Control, Elsevier, vol. 26(9-10), pages 1457-1479, August.
    3. Kendrick, David A., 2005. "Stochastic control for economic models: past, present and the paths ahead," Journal of Economic Dynamics and Control, Elsevier, vol. 29(1-2), pages 3-30, January.
    4. Thomas Vallée, 2018. "Comparison of different Stackelberg solutions in a deterministic dynamic pollution control: the time inconsistency problem revisited," Working Papers halshs-01843717, HAL.

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