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Heterogeneous Interacting Economic Agents and Stochastic Games

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Heterogenous Agents, Interactions and Economic Performance

Part of the book series: Lecture Notes in Economics and Mathematical Systems ((LNE,volume 521))

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Abstract

Stochastic games offer a rich mathematical structure that makes it possible to analyze situations with heterogeneous and interacting economic agents. Depending on the actions of the economic agents, the economic environment changes from one period to another. We focus on stationary equilibrium, the simplest form of behavior that is consistent with rationality. Since the number of stationary equilibria abound, we present the stochastic tracing procedure, a method to select equilibria. Since stationary equilibria are difficult to characterize analytically, we also present a numerical algorithm by which they can be computed. The algorithm is constructed in such a way that the equilibrium selected by the stochastic tracing procedure is computed. We illustrate the usefulness of this approach by showing how it leads to new insights in the theory of dynamic oligopoly.

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Author information

Authors and Affiliations

  1. Department of Economics, Universiteit Maastricht, P.O. Box 616, 6200 MD, Maastricht, The Netherlands

    P. J.-J. Herings & R. J. A. P. Peeters

Authors
  1. P. J.-J. Herings
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  2. R. J. A. P. Peeters
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Editor information

Editors and Affiliations

  1. MERIT, Maastricht University, Tongersestraat 39, 6200 MD, Maastricht, The Netherlands

    Robin Cowan

  2. CNRS, CREA, 1, rue Descartes, 75005, Paris, France

    Nicolas Jonard

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© 2003 Springer-Verlag Berlin Heidelberg

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Herings, P.JJ., Peeters, R.J.A.P. (2003). Heterogeneous Interacting Economic Agents and Stochastic Games. In: Cowan, R., Jonard, N. (eds) Heterogenous Agents, Interactions and Economic Performance. Lecture Notes in Economics and Mathematical Systems, vol 521. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-55651-7_8

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  • DOI: https://doi.org/10.1007/978-3-642-55651-7_8

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-540-44057-4

  • Online ISBN: 978-3-642-55651-7

  • eBook Packages: Springer Book Archive

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