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.[1]

  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.