I am using MATLAB R2021b. I have a stochastic dynamic programming problem that I'm trying to solve by value function iteration (VFI). I want to solve for V in:
My endogenous state variable is 
, my exogenous state variables are P and ϵ and my choice variable is s (ϵ is random). have defined a grid of values for the states. I am interpolating the value function through ndgrid but when I try to find the expected value of the value function I get the following error. This is my code: p_vec=linspace(0.5,5,50)';
epsilon_vec = linspace(0.5,2.5,3)';
s_vec = linspace(sbar,15,100)';
pp = linspace(0.5,5,100)';
epep = linspace(0.5,2.5,20)';
ss = linspace(sbar,15,200)';
[p_grid,epsilon_grid,s_grid] = ndgrid(p_vec,epsilon_vec,s_vec);
[pp_grid,epep_grid, ss_grid] = ndgrid(pp,epep,ss);
pi=[0.3,0.4,0.3;0.25,0.25,0.5;0.7,0.22,0.08];
V0=zeros(length(p_vec),length(epsilon_vec),length(s_vec));
sum(pi(state_ep,:)*interpn(p_grid,epsilon_grid,s_grid,V0,pp_grid,epep_grid,ss_grid));
I am getting two errors. The first one is:
'Error using *
Arguments must be 2-D, or at least one argument must be scalar. Use TIMES (.*) for elementwise multiplication"
So I changed the code to:
sum(pi(state_ep,:).*interpn(p_grid,epsilon_grid,s_grid,V0,pp_grid,epep_grid,ss_grid));
This produced the following error:
"Arrays have incompatible sizes for this operation."
Where am I going wrong?
