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

Ulrich Doraszelski, Yaroslav Kryukov and Ron N. Borkovsky

No 6733, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Computation; Dynamic stochastic games; Homotopy method; Markov-perfect equilibrium (search for similar items in EconPapers)
JEL-codes: C63 C73 (search for similar items in EconPapers)
Date: 2008-03
New Economics Papers: this item is included in nep-gth and nep-ore
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Citations: View citations in EconPapers (7)

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