COMPUTING OPEN-LOOP NONCOOPERATIVE SOLUTION IN DISCRETE DYNAMIC-GAMES

The purpose of this paper is to introduce a new algorithm for the appr oximation of non-quadratic, non-linear open-loop Nash Cournot equilibr ium in a difference game of fixed duration (multiperiod) and initial s tate. The algorithm based on adaptive search procedure called genetic algorithm has been used to optimize strategies for N-person dynamic ga mes. Since genetic algorithms require little knowledge of the problem itself, computations based on these algorithms are very attractive to complex dynamic optimization problems. The empirical evidences are als o provided to show the success of the algorithm developed. A typical e xample in US macroeconomic policy selection for 1933-1936 yields evide nce of political inference in the economy.