Open AccessFinding all pure‐strategy equilibria in games with continuous strategies
Author(s) -
Judd Kenneth L.,
Renner Philipp,
Schmedders Karl
Publication year - 2012
Publication title -
quantitative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.062
H-Index - 27
eISSN - 1759-7331
pISSN - 1759-7323
DOI - 10.3982/qe165
Subject(s) - uniqueness , mathematical economics , polynomial , markov perfect equilibrium , sequential game , computer science , manifold (fluid mechanics) , mathematical optimization , equilibrium selection , nash equilibrium , game theory , mathematics , repeated game , mechanical engineering , mathematical analysis , engineering
Static and dynamic games are important tools for the analysis of strategic interactions among economic agents and have found many applications in economics. In many games, equilibria can be described as solutions of polynomial equations. In this paper, we describe state‐of‐the‐art techniques for finding all solutions of polynomial systems of equations, and illustrate these techniques by computing all equilibria of both static and dynamic games with continuous strategies. We compute the equilibrium manifold for a Bertrand pricing game in which the number of equilibria changes with the market size. Moreover, we apply these techniques to two stochastic dynamic games of industry competition and check for equilibrium uniqueness.