Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/198924 
Authors: 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7564
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper develops a dynamic programming method when the one-stage deviation principle in the sense of mechanism design literature doesn’t hold. The commonly used dynamic programming method is valid only if the one-stage deviation principle in the sense of mechanism design literature is satisfied; it doesn't hold in every model, and the one-stage deviation principle in the sense of repeated games does hold but requires the equilibrium strategy of every player off the equilibrium path and is impractical. The dynamic programming method developed in this paper requires transfinite induction, and therefore one needs to specify the stopping times for two dimensions.
Subjects: 
dynamic programming
one-stage deviation
transfinite induction
stopping time
Document Type: 
Working Paper
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