Groupe d’études et de recherche en analyse des décisions

G-2006-82

Credible Linear-Incentive Equilibrium Strategies in Linear-Quadratic Differential Games

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We characterize in this paper the credibility of linear-incentive equilibrium strategies for the class of linear-quadratic differential games. This class is widely used in applications of differential games in economics and management science. We derive a general condition for credibility and illustrate its use on two examples, one is a general homogenous linear-quadratic game and the second is an environmental-economics game.

, 35 pages