Stationary equilibria in stochastic games: structure, selection, and computation

RJAP Peeters, P.J.J. Herings*

*Corresponding author for this work

    Research output: Contribution to journalArticleScientificpeer-review

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    Abstract

    This paper introduces an algorithm to compute stationary equilibria in stochastic games that is guaranteed to converge for almost all such games. Since in general the number of stationary equilibria is overwhelming, we pay attention to the issue of equilibrium selection. We do this by extending the linear tracing procedure to the class of stochastic games, called the stochastic tracing procedure. As a by-product of our results, we extend a recent result on the generic finiteness of stationary equilibria in stochastic games to oddness of equilibria. (C) 2003 Elsevier Inc. All rights reserved.

    Original languageEnglish
    Pages (from-to)32-60
    Number of pages29
    JournalJournal of Economic Theory
    Volume118
    Issue number1
    DOIs
    Publication statusPublished - Sept 2004

    Keywords

    • game theory
    • stochastic games
    • computation of equilibria
    • linear tracing procedure
    • MARKOV PERFECT EQUILIBRIUM
    • FIXED-POINTS
    • ALGORITHM
    • HOMOTOPY

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