Business Economics and Public Policy Papers

Document Type

Journal Article

Date of this Version

8-2010

Publication Source

Operations Research

Volume

58

Issue

4

Start Page

1116

Last Page

1132

DOI

10.1287/opre.1100.0843

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

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Date Posted: 27 November 2017

This document has been peer reviewed.