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A User's Guide to Solving Dynamic Stochastic Games Using the Homotopy Method

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Author Info
Borkovsky, RON N.
Doraszelski, Ulrich
Kryukov, Yaroslav
Abstract

This paper provides a step-by-step guide to solving dynamic stochastic games using the homotopy method. The homotopy method facilitates exploring the equilibrium correspondence in a systematic fashion; it is especially useful in games that have multiple equilibria. We discuss the theory of the homotopy method and its implementation and present two detailed examples of dynamic stochastic games that are solved using this method.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6733.

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Date of creation: Mar 2008
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Handle: RePEc:cpr:ceprdp:6733

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Related research
Keywords: computation; dynamic stochastic games; homotopy method; Markov-perfect equilibrium;

Find related papers by JEL classification:
C63 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computational Techniques
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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