Fondation HEC Seminar joint with the Chair in game theory and management and the GERAD

Title: Cooperation in a differential game with heterogeneous time preferences

Speaker: Jesús Marín Solano – Universitat de Barcelona, Spain

Abstract: Cooperative solutions in common property resource games with heterogeneous agents are studied. If players have different discount rates, the optimal solution maximizing the sum of intertemporal utilities becomes time-inconsistent. If attention is restricted to subgame perfect solutions, it is shown that they can be strongly inefficient: the sum of payoffs can be higher is cooperation or coordination is forbidden than if it is allowed. Possible solutions to address this problem are presented. The introduction of (non-necessarily constant) weights for players in the coalition could be useful in solving the inefficiency.

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