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Open Access Publications from the University of California

Time-Consistent Policies

  • Author(s): Karp, Larry;
  • Lee, In Ho
  • et al.
Abstract

In many cases the optimal open-loop policy to influence agents who solve dynamic problems is time-inconsistent. We show how to construct a time-consistent open-loop policy rule. We also consider an additional restriction under which the time-consistent open-loop policy is stationary. We use examples to illustrate the properties of these tax rules.

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