Date of this Version
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.
Originally published in Operations Research © 2010 INFORMS
This is a pre-publication version. The final version is available at http://dx.doi.org/10.1287/opre.1100.0843
homotopy method, dynamic stochastic games, Markov perfect equilibrium, equilibrium correspondence, game theory, industrial organization, numerical methods
Borkovsky, R. N., Doraszelski, U., & Kryukov, Y. (2010). A User's Guide to Solving Dynamic Stochastic Games Using the Homotopy Method. Operations Research, 58 (4.2), 1116-1132. http://dx.doi.org/10.1287/opre.1100.0843
Date Posted: 15 June 2018
This document has been peer reviewed.