A finite convergence algorithm for solving linear-quadratic network games with strategic complements and bounded strategies

Abstract

We propose a new algorithm for solving a class of linear-quadratic network games with strategic complements and bounded strategies. The algorithm is based on the sequential solution of linear systems of equations and we prove that it finds the exact Nash equilibrium of the game after a finite number of iterations. The new algorithm is then applied to a social network model of juvenile delinquency which has been investigated recently where we also consider random perturbations of some data. Experimental results show the efficiency of the algorithm in solving large scale problems.