Subgame consistency is a fundamental element in the solution of cooperative stochastic differential games. In particular, it ensures that the extension of the solution policy to a later starting time and any possible state brought about by prior optimal behavior of the players will remain optimal. Recently, mechanisms for the derivation of subgame consistent solutions in stochastic cooperative differential games with transferable payoffs have been found. In the case when players’ payoffs are nontransferable, the derivation of solution candidates is extremely complicated and often intractable. In this chapter, subgame consistent solutions are derived for a class of cooperative stochastic differential games with nontransferable payoffs.
|Title of host publication||Advances in Dynamic Game Theory. Annals of the International Society of Dynamic Games, vol 9|
|Editors||teffen Jørgensen , Marc Quincampoix, Thomas L. Vincent|
|Publisher||Birkhäuser Boston - Springer|
|Number of pages||18|
|Publication status||Published - Jan 2007|