🤖 AI Summary
This study addresses the overlooked spatial coordination mechanisms in critical infrastructure investment, aiming to identify and quantify their impact on equipment replacement decisions—thereby preventing mistimed interventions and loss of coordination benefits arising from neglecting spatial dependence.
Method: We propose a hybrid estimation framework integrating nested fixed-point algorithms with simulated method of moments (SMM), enabling computationally tractable identification of spatial coordination while preserving structural model interpretability.
Contribution/Results: Empirical analysis using GPU replacement data reveals two dominant coordination patterns: sequential replacement cascades and simultaneous failure batch processing. Spatial interdependence accounts for 5.3% of residual variation unexplained by an independent model; sequential coordination is three times stronger than batch processing; and “hotspot” effects in high-risk regions are tenfold those in low-risk areas. A chi-square test strongly rejects the spatial independence hypothesis (p < 0.001).
📝 Abstract
We develop a hybrid approach to estimate spatial coordination mechanisms in structural dynamic discrete choice models by combining nested fixed-point (NFXP) dynamic programming with method of simulated moments (MSM), achieving computational tractability in spatial settings while preserving structural interpretation. Applying this framework to GPU replacement data from 12,915 equipment locations in Oak Ridge National Laboratory's Titan supercomputer, we identify two distinct coordination mechanisms: sequential replacement cascades (gamma_lag = -0.793) and contemporaneous failure batching (gamma_fail = -0.265). Sequential coordination dominates - approximately three times stronger than failure batching - indicating that operators engage in deliberate strategic behavior rather than purely reactive responses. Spatial interdependencies account for 5.3% of variation unexplained by independent-decision models, with coordination concentrated in high-risk thermal environments exhibiting effects more than 10 times stronger than cool zones. Formal tests decisively reject spatial independence (chi-squared(2) = 685.38, p<0.001), demonstrating that infrastructure policies ignoring spatial coordination will systematically mistime interventions and forgo available coordination gains.