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

  • Borkovsky, Ron N.
  • Doraszelski, Ulrich
  • Kryukov, Yaroslav
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    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
    Date of revision:
    Handle: RePEc:cpr:ceprdp:6733
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    7. David Besanko & Ulrich Doraszelski, 2004. "Capacity Dynamics and Endogenous Asymmetries in Firm Size," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 23-49, Spring.
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    18. Schmedders, Karl, 1998. "Computing equilibria in the general equilibrium model with incomplete asset markets," Journal of Economic Dynamics and Control, Elsevier, vol. 22(8-9), pages 1375-1401, August.
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