TY - JOUR

T1 - Cooperative Dynamic Games with Control Lags

AU - Yeung, David W.K.

AU - Petrosyan, Leon A.

PY - 2019/6

Y1 - 2019/6

N2 - Controls with lags are control strategies with prolonged effects lasting for more than one stage of the game after the controls had been executed. Lags in controls yielding adverse effects often make the negative impacts more significant. Cooperation provides an effective means to alleviate the problem and obtains an optimal solution. This paper extends the existing paradigm in cooperative dynamic games by allowing the existence of controls with lag effects on the players’ payoffs in subsequent stages. A novel dynamic optimization theorem with control lags is developed to derive the Pareto optimal cooperative controls. Subgame consistent solutions are derived to ensure sustainable cooperation. In particular, subgame consistency guarantees that the optimality principle agreed upon at the outset will remain effective throughout the game and, hence, there is no incentive for any player to deviate from cooperation scheme. A procedure for imputation distribution is provided to formulate a dynamically stable cooperative scheme under control lags. An application in cooperative environmental management is presented. This is the first time that cooperative dynamic games with control lags are studied.

AB - Controls with lags are control strategies with prolonged effects lasting for more than one stage of the game after the controls had been executed. Lags in controls yielding adverse effects often make the negative impacts more significant. Cooperation provides an effective means to alleviate the problem and obtains an optimal solution. This paper extends the existing paradigm in cooperative dynamic games by allowing the existence of controls with lag effects on the players’ payoffs in subsequent stages. A novel dynamic optimization theorem with control lags is developed to derive the Pareto optimal cooperative controls. Subgame consistent solutions are derived to ensure sustainable cooperation. In particular, subgame consistency guarantees that the optimality principle agreed upon at the outset will remain effective throughout the game and, hence, there is no incentive for any player to deviate from cooperation scheme. A procedure for imputation distribution is provided to formulate a dynamically stable cooperative scheme under control lags. An application in cooperative environmental management is presented. This is the first time that cooperative dynamic games with control lags are studied.

KW - Control lags

KW - Cooperative dynamic games

KW - Subgame consistent solution

UR - http://www.scopus.com/inward/record.url?scp=85065225559&partnerID=8YFLogxK

UR - http://www.mendeley.com/research/cooperative-dynamic-games-control-lags

U2 - 10.1007/s13235-018-0266-6

DO - 10.1007/s13235-018-0266-6

M3 - Article

AN - SCOPUS:85065225559

VL - 9

SP - 550

EP - 567

JO - Dynamic Games and Applications

JF - Dynamic Games and Applications

SN - 2153-0785

IS - 2

ER -