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JOURNALS // Contributions to Game Theory and Management // Archive

Contributions to Game Theory and Management, 2014 Volume 7, Pages 404–414 (Mi cgtm249)

Subgame consistent cooperative solution of stochastic dynamic game of public goods provision

David W. K. Yeungab, Leon A. Petrosyanc

a Department of Business Administration, Hong Kong Shue Yan University, Hong Kong
b Center of Game Theory, St. Petersburg State University, St. Petersburg, Russia
c Faculty of Applied Mathematics-Control Processes, Saint Petersburg State University, St. Petersburg, Russia

Abstract: The provision of public goods constitutes a classic case of market failure which calls for cooperative optimization. However, cooperation cannot be sustainable unless there is guarantee that the agreed-upon optimality principle can be maintained throughout the planning duration. This paper derives subgame consistent cooperative solutions for public goods provision by asymmetric agents with transferable payoffs in a stochastic discrete-time dynamic game framework. This is the first time that dynamic cooperative game in public goods provision is analysed.

Keywords: Public goods, stochastic dynamic games, dynamic cooperation, subgame consistency.

Language: English



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