Quantal Response Equilibria for Normal Form Games

McKelvey, Richard D.; Palfrey, Thomas R.

doi:10.1006/game.1995.1023

Cited by 2,028 publications

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“…Several related models allow for heterogeneity in the ability of players to correctly conjecture competitor behavior in entry games, including quantal response equilibrium (e.g., McKelvey and Palfrey 1995), level-k thinking (e.g., Costa-Gomes and Crawford 2006), and cognitive hierarchy (e.g., Camerer, Ho, and Chong 2004). For our purposes, cognitive hierarchy (henceforth CH) models the heterogeneity in an especially useful way because it includes a parameter that unambiguously identifies players as being better at playing the game.…”

Section: ) Introductionmentioning

confidence: 99%

Who Thinks about the Competition? Managerial Ability and Strategic Entry in US Local Telephone Markets

Goldfarb

Xiao

2008

SSRN Journal

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Section: ) Introductionmentioning

confidence: 99%

Who Thinks about the Competition? Managerial Ability and Strategic Entry in US Local Telephone Markets

Goldfarb

Xiao

2008

SSRN Journal

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“…An explanation proposed by McKelvey and Palfrey (1995) is that in general we should expect behavior in games to exhibit more randomness than is often implied by the sharp Nash equilibrium predictions. A natural approach is to treat best response functions as being stochastic: actions with higher expected payoffs are more likely to be chosen, although "best" responses are not chosen with probability one.…”

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confidence: 99%

Risk averse behavior in generalized matching pennies games

Goeree

Holt

Palfrey

2003

Games and Economic Behavior

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Abstract. In experimental studies of behavior in 2 × 2 games with unique mixed strategy equilibria, observed choice frequencies are systematically different from mixed-strategy Nash predictions. This paper examines experimental results for a variety of such games, and shows that a structural econometric model which incorporates risk aversion into a quantal response equilibrium explains the data very well. Moreover, risk aversion estimates are stable across the different games and are close to those obtained from laboratory and field auction data, as well as from individual lottery choice experiments.

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“…12 As pointed out by a referee, this estimation nests the one player analogy of Quantal Response (McKelvey andPalfrey 1995, Goeree et al 2005) by adding the three heuristics-tallying, lexicographic, and undominated. QRE would only use the expected payoff as the explanatory variable.…”

Section: Heuristicsmentioning

confidence: 90%

Age Effects and Heuristics in Decision Making

et al. 2010

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Using controlled experiments, we examine how individuals make choices when faced with multiple options. Choice tasks are designed to mimic the selection of health insurance, prescription drug, or retirement savings plans. In our experiment, available options can be objectively ranked allowing us to examine optimal decision making. First, the probability of a person selecting the optimal option declines as the number of options increases, with the decline being more pronounced for older subjects. Second, heuristics differ by age with older subjects relying more on suboptimal decision rules. In a heuristics validation experiment, older subjects make worse decisions than younger subjects.

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Quantal Response Equilibria for Normal Form Games

Cited by 2,028 publications

References 0 publications

Who Thinks about the Competition? Managerial Ability and Strategic Entry in US Local Telephone Markets

Who Thinks about the Competition? Managerial Ability and Strategic Entry in US Local Telephone Markets

Risk averse behavior in generalized matching pennies games

Age Effects and Heuristics in Decision Making

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