A Nash equilibrium for differential games with moving-horizon strategies

Giovanni Di Bartolomeo (), Willi Semmler and Enrico Saltari

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Abstract: Our paper introduces a moving-horizon interaction in a strategic context. We assume that players can predict the effects of their actions and those of their opponents on a finite moving horizon. We define an equilibrium concept for this setting and develop an algorithm using nonlinear model predictive control techniques to compute it. Focusing on the forecasting horizon's length, we propose two economic interpretations of our equilibrium based on limited rationality and political economy literature. Finally, we consider a debt stabilization game in a monetary union to provide practical insights into our approach.

Keywords: Nash equilibrium; moving-horizon strategy; model predictive control; debt stabilization; monetary union (search for similar items in EconPapers)
JEL-codes: C73 E61 H63 (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-gth
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: A Nash Equilibrium for Differential Games with Moving-Horizon Strategies (2022)
Working Paper: A Nash Equilibrium for Differential Games with Moving-horizon Strategies (2021)
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