Abstract

https://ssrn.com/abstract=2207636
 
 

References (14)



 


 



Testing the Foundations of Quantal Response Equilibrium


Mathew D. McCubbins


Department of Political Science and Law School, Duke University

Mark B. Turner


Case Western Reserve University - Department of Cognitive Science

Nicholas Weller


University of Southern California - Department of Political Science; University of Southern California - School of International Relations

January 27, 2013

Proceedings of the International Conference on Social Computing, Behavioral-Cultural Modeling & Prediction, 2013

Abstract:     
Quantal response equilibrium (QRE) has become a popular alternative to the standard Nash equilibrium concept in game theoretic applications. It is well known that human subjects do not regularly choose Nash equilibrium strategies. It has been hypothesized that subjects are limited by strategic uncertainty or that subjects have broader social preferences over the outcome of games. These two factors, among others, make subjects boundedly-rational. QRE, in essence, adds a logistic error function to the strict, knife-edge predictions of Nash equilibria. What makes QRE appealing, however, also makes it very difficult to test, because almost any observed behavior may be consistent with different parameterizations of the error function. We present the first steps of a research program designed to strip away the underlying causes of the strategic errors thought to be modeled by QRE. If these causes of strategic error are correct explanations for the deviations, then their removal should enable subjects to choose Nash equilibrium strategies. We find, however, that subjects continue to deviate from predictions even when the reasons presumed by QRE are removed. Moreover, the deviations are different for each and every game, and thus QRE would require the same subjects to have different error parame-terizations. While we need more expansive testing of the various causes of stra-tegic error, in our judgment, therefore, QRE is not useful at predicting human behavior, and is of limited use in explaining human behavior across even a small range of similar decisions.

Number of Pages in PDF File: 10

Keywords: bounded rationality, human behavior, Nash equilibrium, behavioral game theory, strategic uncertainty, social preferences, Quantal Response Equilibrium


Open PDF in Browser Download This Paper

Date posted: January 27, 2013  

Suggested Citation

McCubbins, Mathew D. and Turner, Mark B. and Weller, Nicholas, Testing the Foundations of Quantal Response Equilibrium (January 27, 2013). Proceedings of the International Conference on Social Computing, Behavioral-Cultural Modeling & Prediction, 2013. Available at SSRN: https://ssrn.com/abstract=2207636

Contact Information

Mathew D. McCubbins
Department of Political Science and Law School, Duke University ( email )
210 Science Drive
Box 90362
Durham, NC 27708
United States

Mark B. Turner
Case Western Reserve University - Department of Cognitive Science ( email )
10900 Euclid Avenue
Cleveland, OH 44106-7068
United States
HOME PAGE: http://markturner.org
Nicholas Weller (Contact Author)
University of Southern California - Department of Political Science ( email )
Von KleinSmid Center, 327
Los Angeles, CA 90089
United States
University of Southern California - School of International Relations
Los Angeles, CA 90089
United States
Feedback to SSRN


Paper statistics
Abstract Views: 947
Downloads: 133
Download Rank: 171,482
References:  14