Endogenous Duration of Long-term Agreements in Cooperative Dynamic Games with Nontransferable Utility

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Endogenous Duration of Long-term Agreements in Cooperative Dynamic Games with Nontransferable Utility. / Parilina, Elena M.; Reddy, Puduru Viswanadha; Zaccour, Georges.

In: Journal of Optimization Theory and Applications, Vol. 195, No. 3, 3, 12.2022, p. 808-836.

Research output: Contribution to journal › Article › peer-review

Author

Parilina, Elena M. ; Reddy, Puduru Viswanadha ; Zaccour, Georges. / Endogenous Duration of Long-term Agreements in Cooperative Dynamic Games with Nontransferable Utility. In: Journal of Optimization Theory and Applications. 2022 ; Vol. 195, No. 3. pp. 808-836.

BibTeX

@article{1fac6882ee4449ff83af51d9af38f953,

title = "Endogenous Duration of Long-term Agreements in Cooperative Dynamic Games with Nontransferable Utility",

abstract = "In this paper, we study the time consistency of cooperative agreements in dynamic games with non-transferable utility. An agreement designed at the outset of a game is time-consistent (or sustainable) if it remains in place for the entire duration of the game, that is, if the players would not benefit from switching to their non-cooperative strategies. The literature has highlighted that, since side payments are not allowed, the design of such an agreement is very challenging. To address this issue, we introduce different notions for the temporal stability of an agreement and determine endogenously the duration of the agreement. We illustrate our general results with a linear-quadratic difference game and show that an agreement{\textquoteright}s duration can be easily assessed using the problem data. We also study the effect of information structure on the endogenous duration of the agreement. We illustrate our results with a numerical example.",

keywords = "Dynamic games, Long-term cooperative agreements, Nontransferable utility, Time consistency",

author = "Parilina, {Elena M.} and Reddy, {Puduru Viswanadha} and Georges Zaccour",

note = "Publisher Copyright: {\textcopyright} 2022, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.",

year = "2022",

month = dec,

doi = "10.1007/s10957-022-02109-9",

language = "English",

volume = "195",

pages = "808--836",

journal = "Journal of Optimization Theory and Applications",

issn = "0022-3239",

publisher = "Springer Nature",

number = "3",

}

RIS

TY - JOUR

T1 - Endogenous Duration of Long-term Agreements in Cooperative Dynamic Games with Nontransferable Utility

AU - Parilina, Elena M.

AU - Reddy, Puduru Viswanadha

AU - Zaccour, Georges

PY - 2022/12

Y1 - 2022/12

N2 - In this paper, we study the time consistency of cooperative agreements in dynamic games with non-transferable utility. An agreement designed at the outset of a game is time-consistent (or sustainable) if it remains in place for the entire duration of the game, that is, if the players would not benefit from switching to their non-cooperative strategies. The literature has highlighted that, since side payments are not allowed, the design of such an agreement is very challenging. To address this issue, we introduce different notions for the temporal stability of an agreement and determine endogenously the duration of the agreement. We illustrate our general results with a linear-quadratic difference game and show that an agreement’s duration can be easily assessed using the problem data. We also study the effect of information structure on the endogenous duration of the agreement. We illustrate our results with a numerical example.

AB - In this paper, we study the time consistency of cooperative agreements in dynamic games with non-transferable utility. An agreement designed at the outset of a game is time-consistent (or sustainable) if it remains in place for the entire duration of the game, that is, if the players would not benefit from switching to their non-cooperative strategies. The literature has highlighted that, since side payments are not allowed, the design of such an agreement is very challenging. To address this issue, we introduce different notions for the temporal stability of an agreement and determine endogenously the duration of the agreement. We illustrate our general results with a linear-quadratic difference game and show that an agreement’s duration can be easily assessed using the problem data. We also study the effect of information structure on the endogenous duration of the agreement. We illustrate our results with a numerical example.

KW - Dynamic games

KW - Long-term cooperative agreements

KW - Nontransferable utility

KW - Time consistency

UR - http://www.scopus.com/inward/record.url?scp=85138206291&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/49ec5d3e-0ca5-34ed-9a44-fa7d34355a8b/

U2 - 10.1007/s10957-022-02109-9

DO - 10.1007/s10957-022-02109-9

M3 - Article

AN - SCOPUS:85138206291

VL - 195

SP - 808

EP - 836

JO - Journal of Optimization Theory and Applications

JF - Journal of Optimization Theory and Applications

SN - 0022-3239

IS - 3

M1 - 3

ER -

ID: 100063206