Averaging principle for second-order approximation of heterogeneous models with homogeneous models.

Abstract

Typically, models with a heterogeneous property are considerably harder to analyze than the corresponding homogeneous models, in which the heterogeneous property is replaced by its average value. In this study we show that any outcome of a heterogeneous model that satisfies the two properties of differentiability and symmetry is O(ε(2)) equivalent to the outcome of the corresponding homogeneous model, where ε is the level of heterogeneity. We then use this averaging principle to obtain new results in queuing theory, game theory (auctions), and social networks (marketing).