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Time-consistency of cooperative solutions

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  • Zenkevich, Nikolay A.
  • Petrosjan, Leon A.

Abstract

Management in complex social and economics networks includes elements of cooperative behavior or full cooperation between agents involved in decision making process. The most appropriate mathematical tool for modeling in this case is the mathematical theory of cooperative games. Unfortunately the classical cooperative game theory considers cooperation as one-shot interaction between the decision makers and for this reason can not be used for modeling of dynamic interactions arising in long term strategic management. The theory of cooperative differential games is the most adequate tool for modeling strategic management development on a given time interval. The use of this theory from the beginning poses the problems connected with dynamic stability (time-consistency) of optimal cooperative solutions. The consideration of optimality principles taken from the classical cooperative game theory shows the time-inconsistency and thus non applicability of these principles in strategic management. In this paper the methods of construction of time consistent solutions is proposed for the problems of strategic management in social and economic networks. The authors tried to present a rather complicated material on acceptable level. Theory is illustrated with a number of examples and a more comprehensive analysis of joint venture.

Suggested Citation

  • Zenkevich, Nikolay A. & Petrosjan, Leon A., 2006. "Time-consistency of cooperative solutions," Working Papers 815, Graduate School of Management, St. Petersburg State University.
    • Handle: RePEc:sps:wpaper:815
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    Cited by:

    1. Nikolchenko, Natalia & Lebedeva, Anastasia, 2017. "Integrative Approach to Supply Chain Collaboration in Distribution Networks: Impact on Firm Performance," Conference Papers 10462, Graduate School of Management, St. Petersburg State University.
    2. Petrosyan, Leon A. (ed.) & Zenkevich, Nikolay A. (ed.), 2017. "Contributions to Game Theory and Management (GTM2016), vol. X," Conference Papers 10427, Graduate School of Management, St. Petersburg State University.

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