Adjustment dynamics in network game with stochastic parameters

Abstract

In this paper, stochastic parameters are introduced into the network games model with production and knowledge's externalities. This model was formulated by V. Matveenko and A. Korolev and generalized two-period Romer model. Agents' productivities have deterministic and Wiener components. We consider the dynamics that occur when two complete networks are combined. Explicit expressions in the form of Brownian random processes are obtained. A qualitative analysis of the solution of a system of stochastic equations is carried out.