Book contents
- Frontmatter
- Contents
- Preface
- 1 Introduction
- 2 The theory of economic policy and the linear model
- 3 Optimal-policy design
- 4 Uncertainty and risk
- 5 Risk aversion, priorities and achievements
- 6 Non-linear optimal control
- 7 The linear rational-expectations model
- 8 Policy design for rational-expectations models
- 9 Non-cooperative, full-information dynamic games
- 10 Incomplete information, bargaining and social optima
- Notes
- References
- Index
9 - Non-cooperative, full-information dynamic games
Published online by Cambridge University Press: 17 September 2009
- Frontmatter
- Contents
- Preface
- 1 Introduction
- 2 The theory of economic policy and the linear model
- 3 Optimal-policy design
- 4 Uncertainty and risk
- 5 Risk aversion, priorities and achievements
- 6 Non-linear optimal control
- 7 The linear rational-expectations model
- 8 Policy design for rational-expectations models
- 9 Non-cooperative, full-information dynamic games
- 10 Incomplete information, bargaining and social optima
- Notes
- References
- Index
Summary
INTRODUCTION
One of the most important features revealed by the analysis of the previous two chapters was the extent to which the policy-maker needs to take account of how the private sector will react to expectations of what the policy-maker will do in the future. This raised a number of problems – of a technical nature – because of the inadequacy of recursive techniques based on dynamic programming, and also problems of a more general kind arising from attempting to ensure the ‘consistency’ of policy over time.
In this chapter and the next we examine policy as a dynamic game. Typically this will take the form of a game between competing groups who contribute to the process of policy-making – and this has been widely analysed in bargaining theory – but it could also be a game between different countries.
The two essential features of a dynamic game are the degree of cooperation between participants and the amount of information that any particular participant has about the tastes, intentions and preferences of others. In this chapter we assume that there is no cooperation between players while each player has full information about the tastes, preferences and intentions of other players. The following chapter will then deal with cases of incomplete information, bargaining models and cooperation and social optima.
- Type
- Chapter
- Information
- Optimal Control, Expectations and Uncertainty , pp. 169 - 196Publisher: Cambridge University PressPrint publication year: 1989