On Time Inconsistency: A Technical Issue in Stackelberg Differential Games

Danyang Xie

Macroeconomics from EconWPA

Abstract: Stackelberg differential games are useful settings in which optimal government policies can be studied. This paper argues that the analysis of these games involves a key technical issue. In particular, we question the necessity for optimality of one boundary condition invoked in existing literature. The issue is of key interest because the boundary condition is largely responsible for the time inconsistency results previously obtained. We show that the boundary condition is not necessary in some cases. As a result, our finding undermines the credibility of the existing conclusions. Forthcoming 1997: Journal of Economic Theory.

Keywords: Time Inconsistency; Stackelberg Differential Game (search for similar items in EconPapers)
JEL-codes: C61 E62 H21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2002-12-11
Note: Type of Document - PDF; prepared on PC; to print on HP; pages: 30 ; figures: none
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Journal Article: On Time Inconsistency: A Technical Issue in Stackelberg Differential Games (1997)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0212004

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