Solution of multi-player linear-quadratic alternating-move games and its application to the timing pattern of wage adjustment

摘要

In order to analyze a multi-player linear-quadratic alternating-move dynamic game, this paper develops a solution method by making use of the similar structure of this game and a simultaneous-move dynamic game with alternating payoff functions. It then applies the method to investigate whether staggered or synchronized wage adjustment will be preferred when more than two wage setters interact strategically and dynamically. The results suggest that the strategic benefit provided by staggered wage adjustment is robust with respect to the number of sectors in the economy.