Abstract

http://ssrn.com/abstract=926519
 
 

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On the Empirical Content of Quantal Response Equilibrium


Philip A. Haile


Yale University - Department of Economics; National Bureau of Economic Research (NBER)

Ali Hortacsu


University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Grigory Kosenok


New Economic School

August 2006

Cowles Foundation Discussion Paper No. 1432R

Abstract:     
The quantal response equilibrium (QRE) notion of McKelvey and Palfrey (1995) has recently attracted considerable attention, due in part to its widely documented ability to rationalize observed behavior in games played by experimental subjects. However, even with strong a priori restrictions on unobservables, QRE imposes no falsifiable restrictions: it can rationalize any distribution of behavior in any normal form game. After demonstrating this, we discuss several approaches to testing QRE under additional maintained assumptions.

Number of Pages in PDF File: 27

Keywords: Quantal response equilibrium, Falsifiability, Testable restrictions, Regular quantal response equilibrium, Rank-cumulative probabilities, Block-Marschak polynomials

JEL Classification: C7, C9

working papers series


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Date posted: August 28, 2006  

Suggested Citation

Haile, Philip A. and Hortacsu, Ali and Kosenok, Grigory, On the Empirical Content of Quantal Response Equilibrium (August 2006). Cowles Foundation Discussion Paper No. 1432R. Available at SSRN: http://ssrn.com/abstract=926519

Contact Information

Philip A. Haile (Contact Author)
Yale University - Department of Economics ( email )
28 Hillhouse Ave
New Haven, CT 06520-8264
United States
203-432-3568 (Phone)
203-432-6323 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Ali Hortacsu
University of Chicago - Department of Economics ( email )
1126 East 59th Street
Chicago, IL 60637
United States
773-702-5841 (Phone)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Grigory Kosenok
New Economic School ( email )
47 Nakhimovsky Prospekt
Suite 1721
117418 Moscow
Russia
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