The envelope theorem for locally differentiable Nash equilibria of finite horizon differential games
Abbreviated Journal Title
Games Econ. Behav.
envelope theorem; differential games; Nash equilibria; OPEN-LOOP; COMPARATIVE STATICS; DYNAMIC GAME; OLIGOPOLY; Economics
Envelope theorems are established for a ubiquitous class of finite horizon differential games. The theorems cover open-loop and feedback information patterns in which the corresponding Nash equilibria are locally differentiable with respect to the parameters of the game. Their relationship with extant envelope results is discussed and an application of them to a generalized capital accumulation game is provided. An important implication of the theorems is that, in general, the archetypal economic interpretation of the costate vector, namely, as the shadow value of the state vector along the Nash equilibrium, is valid for feedback Nash equilibria, but not for open-loop Nash equilibria. (C) 2007 Elsevier Inc. All rights reserved.
Games and Economic Behavior
"The envelope theorem for locally differentiable Nash equilibria of finite horizon differential games" (2007). Faculty Bibliography 2000s. 6911.