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Computational Methods for Oblivious Equilibrium

Computational Methods for Oblivious Equilibrium,10.1287/opre.1090.0790,Operations Research,Gabriel Y. Weintraub,C. Lanier Benkard,Benjamin Van Roy

Computational Methods for Oblivious Equilibrium   (Citations: 9)
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Oblivious equilibrium is a new solution concept for approximating Markov perfect equilibrium in dy- namic models of imperfect competition among heterogeneous firms. In this paper, we present algorithms for computing oblivious equilibrium and for bounding approximation error. We report results from com- putational case studies that serve to assess both efficiency of the algorithms and accuracy of oblivious equilibrium as an approximation to Markov perfect equilibrium. We also extend the definition of obliv- ious equilibrium, originally proposed for models with only firm-specific idiosyncratic random shocks, and our algorithms to accommodate models with industry-wide aggregate shocks. Our results suggest that, by using oblivious equilibrium to approximate Markov perfect equilibrium, it is possible to greatly increase the set of dynamic models of imperfect competition that can be analyzed computationally.
Journal: Operations Research , vol. 58, no. 4-Part-2, pp. 1247-1265, 2010
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    • ...To facilitate using OE in practice, in Weintraub, Benkard, and Van Roy (2008a) we provide a computa-...
    • ...mations. As a matter of fact, in Weintraub, Benkard, and Van Roy (2008a) we extended our base model as...
    • ...Weintraub, Benkard, and Van Roy (2008a) for OE...
    • ...Weintraub, Benkard, and Van Roy (2008a) where firms can change their state by at most one quality level...
    • ...We use the same model as in Section 6 of Weintraub, Benkard, and Van Roy (2008a)...
    • ...B.1 in Weintraub, Benkard, and Van Roy (2008a) to obtain:...

    C. L. Benkardet al. Nonstationary Oblivious Equilibrium

    • ...directly in a companion paper (Weintraub, Benkard, and Van Roy 2007), where we provide a computational...
    • ...As stated in the introduction (see also Weintraub, Benkard, and Van Roy (2007)), OE are simple to compute...

    Gabriel Y. Weintraubet al. Markov Perfect Industry Dynamics with Many Firms

    • ...To facilitate using OE in practice, in Weintraub, Benkard, and Van Roy (2007a) we provide a computa-...
    • ...imations. As a matter of fact, in Weintraub, Benkard, and Van Roy (2007a) we extend our base model as...
    • ...Weintraub, Benkard, and Van Roy (2007a)) trade off increased computation time for a better behavioral...
    • ...This idea is similar to OE with aggregate shocks; see Weintraub, Benkard, and Van Roy (2007a)...
    • ...2. Additionally, we plan to combine the ideas of Weintraub, Benkard, and Van Roy (2007a) and Section...

    C. Lanier Benkard. Extensions to Oblivious Equilibrium

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