Informational properties of the Nash solutions of two stochastic nonzero-sum games

M Tamer Basar, Yu Chi Ho

Research output: Contribution to journalArticle

Abstract

Within the framework of stochastic two-person nonzero-sum games, we deal with two commonly used models in engineering and economics-namely, the LQG (Linear-Quadratic-Gaussian) and the duopoly problems. We investigate how variations in information available to either player affect the equilibrium Nash strategies for these two models, whose existence and uniqueness have been proven in the paper. We show that for the LQG model better information for either player results in lower average Nash costs for both players; whereas for the duopoly model better information for one player helps him alone to achieve a higher average Nash profit, and it hurts the other player in the sense that his average Nash profit decreases. We further relate these properties of the Nash solutions for these two games to some of the distinct features of zero-sum games and team problems.

Original languageEnglish (US)
Pages (from-to)370-387
Number of pages18
JournalJournal of Economic Theory
Volume7
Issue number4
DOIs
StatePublished - Apr 1974
Externally publishedYes

Fingerprint

Profit
Duopoly
Nash solution
Information model
Zero-sum game
Nash equilibrium
Costs
Economics
Uniqueness

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Informational properties of the Nash solutions of two stochastic nonzero-sum games. / Basar, M Tamer; Ho, Yu Chi.

In: Journal of Economic Theory, Vol. 7, No. 4, 04.1974, p. 370-387.

Research output: Contribution to journalArticle

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