Abstract
Baoline Chen and Peter A. Zadrozny (2001) "An Anticipative
Feedback Solution for the Infinite-Horizon, Linear-Quadratic, Dynamic, Stackelberg
Game."
This paper derives and illustrates a new suboptimal-consistent feedback solution for an
infinite-horizon, linear-quadratic, dynamic, Stackelberg game. This solution lies in the
same solution space as the infinite-horizon, dynamic-programming, feedback solution but
puts the leader in a preferred equilibrium position. The idea comes from Kydland (1977)
who suggested deriving a consistent feedback solution for an infinite-horizon,
linear-quadratic, dynamic, Stackelberg game by varying the coefficients in the player's
linear constant-coefficient decision rules. Here feedback is understood in the sense of
setting a current control vector as a function of a predetermined state vector. The
proposed solution is derived for discrete- and continuous-time games and is called the
anticipative feedback solution. The solution is illustrated with a numerical example of a
duopoly model.
Last Modified Date: July 19, 2008
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