Open-loop model

In game theory, an open-loop model is the one where players cannot observe the play of their opponents, as opposed to a closed-loop model, where all past play is common knowledge. The solution to an open-loop model is called open-loop equilibrium. Open loop models are more tractable, which is why they are sometimes preferred to closed-loop models even when the latter is a better description of reality.

For other uses of "Open-loop", see Open-loop (disambiguation).

In game theory, an open-loop model is the one where players cannot observe the play of their opponents, as opposed to a closed-loop model, where all past play is common knowledge. The solution to an open-loop model is called open-loop equilibrium.

Open loop models are more tractable, which is why they are sometimes preferred to closed-loop models even when the latter is a better description of reality.^[1]

References

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1. ^ Fudenberg, B; Levine, DK (1988). "Open-Loop and Closed-Loop Equilibria of Dynamic Games with Many Players". Journal of Economic Theory. 44: 1–18. doi:10.1016/0022-0531(88)90093-2.

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