Scalable Structural Estimation of Networked Infrastructure: Exact Decomposition for Localized Coordination (opens in new tab)

Interaction effects are often economically central in environments where structural dynamic estimation becomes computationally infeasible. Under fixed group membership and sparse within-group interaction structure, the Bellman operator admits a block-diagonal decomposition that allows high-dimensional dynamic programs to be solved through independent group-level subproblems while preserving the original structural problem exactly. The result app...