TIME CONSISTENCY IN ALTERNATING‐MOVE POLICY GAMES*

Inkoo Cho and Akihiko Matsui ()

The Japanese Economic Review, 2005, vol. 56, issue 3, 273-294

Abstract: We examine alternating‐move policy games where the government and the private sector alternate their moves. In contrast with the standard policy game, the set of equilibrium payoffs of the present model is bounded away from the payoff under the one‐shot Nash equilibrium, called the Kydland–Prescott outcome, and the upper bound is close to the payoff under the optimal policy (called the Ramsey policy) if the government is sufficiently patient. In other words, the Kydland–Prescott outcome is not time consistent, while the Ramsey outcome could be approximated by a time‐consistent policy of the same game.

Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://doi.org/10.1111/j.1468-5876.2005.00326.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jecrev:v:56:y:2005:i:3:p:273-294

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1352-4739

Access Statistics for this article

The Japanese Economic Review is currently edited by Akira Okada

More articles in The Japanese Economic Review from Japanese Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().