Estimating Discrete Games
Marketing Science, Vol. 30, No. 6, pp. 997-1010, 2011
33 Pages Posted: 21 Mar 2011 Last revised: 31 Jan 2012
Date Written: November 21, 2010
This paper provides a critical review of the methods for estimating static discrete games and their relevance for quantitative marketing. We discuss the various modeling approaches, alternative assumptions, and relevant trade-offs involved in taking these empirical methods to data. We consider both games of complete and incomplete information, examine the primary methods for dealing with the coherency problems introduced by multiplicity of equilibria, and provide concrete examples from the literature. We illustrate the mechanics of estimation using a real world example and provide the computer code and dataset with which to replicate our results.
Keywords: discrete choice, game theory, strategic interaction
JEL Classification: M31, C14, C31, C35
Suggested Citation: Suggested Citation