On durable-strategies dynamic game theory

David W. K. Yeung^ab, Yingxuan Zhang<sup>a

a</sup> SRS Consortium for Advanced Studies, Hong Kong Shue Yan University, 10 Wai Tsui Crescent, Braemar Hill, North Point, Hong Kong
^b Center of Game Theory, St. Petersburg State University, 7/9, Universitetskaya nab., St. Petersburg, 199034, Russia

Abstract: An empirically meaningful theory of dynamic games has to incorporate real-life phenomena. Durable strategies, which effects last for a period of time, are prevalent in real-life situations. Revenue generating investments, toxic waste disposal and purchase of durable goods are common examples of durable strategies. This paper first provides a review on durable-strategies dynamic game theory. A practically relevant advancement – random horizon durable-strategies dynamic games - yielding novel results in durable-strategies dynamic games theory is then presented. Dynamic optimization theorem, game formulations and HJB equations are derived. An illustrative example is provided. The theory and solution mechanism of durable-strategies cooperative dynamic games are also discussed.

Keywords: dynamic Game, durable-strategies, random horizon.

Language: English

DOI: 10.21638/11701/spbu31.2022.23

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