American Economic Review Vol. 98 No. 1 2008

On the Empirical Content of Quantal Response Equilibrium

Philip A. Haile¹; Ali Hortaçsu²; Grigory Kosenok³

¹ Department of Economics and Cowles Foundation, Yale University, 37 Hillhouse Avenue, Box 208264, New Haven, CT 06520, and NBER. · ² Department of Economics, University of Chicago, 1126 E. 59th St., Chicago, IL 60637, and NBER. · ³ New Economic School, Nakhimovsky Prospekt 47, Suite 1721 (11), 117418 Moscow, Russia.

Abstract

The quantal response equilibrium (QRE) notion of Richard D. McKelvey and Thomas R. 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.

DOI

10.1257/aer.98.1.180

Volume

98

Issue

1

Pages

180-200

Language

en

Sources

openalex crossref bibtex:phds-export.bib

Cite

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