New research reveals how to compute exact equilibria in economic models.
The article discusses how to find accurate solutions for economic models with different agents and incomplete markets. It introduces the concept of approximate equilibria as solutions for similar economies with small differences in resources and preferences. By defining epsilon-equilibria, the researchers can analyze errors in these approximate solutions and determine how close they are to exact equilibria. They show how small changes in individual resources and preferences can ensure that an epsilon-equilibrium closely approximates an exact equilibrium.