Individual and collective rationality in a dynamic Pareto equilibrium

This paper deals with the problem of establishing the conditions for individual and collective rationality when a set of players cooperate in a Pareto equilibrium. To derive such conditions one follows the approach of the theory of reachability of perturbed systems. Open-loop and closed-loop concepts are discussed and are shown to be nonequivalent.The research of the first author was supported in part by Canada Council Grant No. S-701-491 and has benefited from collaboration with the Laboratoire d'Automatique Théorique de l'Université de Paris VII, Paris, France.