Optimal switching from competition to cooperation: a preliminary exploration
Pré-publication, Document de travail: In this paper, we tackle a generic optimal regime switching problem where the decision making process is not the same from a regime to another. Precisely, we consider a simple model of optimal switching from competition to cooperation. To this end, we solve a two- stage optimal control problem. In the first stage, two players engage in a dynamic game with a common state variable and one control for each player. We solve for open-loop strategies with a linear state equation and linear-quadratic payoffs. More importantly, the players may also consider the possibility to switch at finite time to a cooperative regime with the associated joint optimization of the sum of the individual payoffs. Using the- oretical analysis and numerical exercises, we study the optimal switching strategy from competition to cooperation. We also discuss the reverse switching.
Auteur(s)
Raouf Boucekkine, Carmen Camacho, Benteng Zou
Date de publication
- 2020
Mots-clés
- Cooperation
- Competition
- Dynamic games
- Multi-stage optimal control
Référence interne
- PSE Working Papers n°2020-01
URL de la notice HAL
Version
- 1