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Direct Method Comparing Efficient and Nonefficient Payoffs in Differential Games

Author

Listed:
  • J.P. Rincón-Zapatero

    (Universidad de Valladolid)

  • G. Martín-Herrán

    (Universidad de Valladolid)

Abstract

In this note, we present a method that allows us to decide when a Markov-perfect Nash equilibrium is not Pareto optimum, without the explicit knowledge of the respective solutions. For that purpose, we establish a sufficient condition in terms of an algebraic inequality where the gradient of the value functions of the cooperative and noncooperative games as well as the state and control variables are involved.

Suggested Citation

  • J.P. Rincón-Zapatero & G. Martín-Herrán, 2003. "Direct Method Comparing Efficient and Nonefficient Payoffs in Differential Games," Journal of Optimization Theory and Applications, Springer, vol. 119(2), pages 395-405, November.
    • Handle: RePEc:spr:joptap:v:119:y:2003:i:2:d:10.1023_b:jota.0000005453.96575.2a
    DOI: 10.1023/B:JOTA.0000005453.96575.2a
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    References listed on IDEAS

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    1. Hoel, Michael, 1978. "Distribution and Growth as a Differential Game between Workers and Capitalists," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 335-350, June.
    2. Lancaster, Kelvin, 1973. "The Dynamic Inefficiency of Capitalism," Journal of Political Economy, University of Chicago Press, vol. 81(5), pages 1092-1109, Sept.-Oct.
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