On the Empirical Content of Quantal Response Equilibrium

23 Pages Posted: 8 Sep 2003

See all articles by Philip A. Haile

Philip A. Haile

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

Ali Hortacsu

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

Grigory Kosenok

New Economic School

Multiple version iconThere are 2 versions of this paper

Date Written: August 2003

Abstract

The quantal response equilibrium (QRE) notion of McKelvey and Palfrey (1995) has recently attracted considerable attention, due largely to its widely documented ability to rationalize observed behavior in games played by experimental subjects. We show that this ability to fit the data, as typically measured in this literature, is uninformative. Without a priori distributional assumptions, a QRE can match any distribution of behavior by each player in any normal form game. We discuss approaches that might be taken to provide valid empirical evaluation of the QRE and discuss its potential value as an approximating empirical structure.

Keywords: quantal response equilibrium, testable restrictions, comparative statics

JEL Classification: C52, C7, C9

Suggested Citation

Haile, Philip A. and Hortacsu, Ali and Kosenok, Grigory, On the Empirical Content of Quantal Response Equilibrium (August 2003). Cowles Foundation Discussion Paper No. 1432. Available at SSRN: https://ssrn.com/abstract=442360

Philip A. Haile (Contact Author)

Yale University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Yale University - Cowles Foundation

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Ali Hortacsu

University of Chicago - Department of Economics ( email )

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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 )

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Suite 1721
117418 Moscow
Russia

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