Dynamic consistency under private information 1

Time inconsistency is often demonstrated in the con­ text of the global Stackelberg solution of a two-person, two-stage dynamic game. The loop model of dynamic games is used. The recommended solution to the problem is for both players to adopt open-loop strategies. V\T e recast the problem in an imperfect informa­ tion framework. In contrast to the standard result, (i) a consistency in the outcomes of the Na.sh game and the associated Stackelberg game is shown and (ii) it is proved that under feedback information patterns, both players prefer to play the Stackelberg game rather than the associated N ash game.