Quantal Response Equilibrium with Symmetry: Representation and Applications

Friedman, Evan; Mauersberger, Felix

doi:10.2139/ssrn.4190336

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“…Following Friedman and Mauersberger (2022), whenever Q satisfies (R1)-( R4) and (S1)-(S2), we refer to the resulting model as symmetric QRE or SQRE.…”

Section: Quantal Response Equilibriummentioning

confidence: 99%

“…These require that actions with higher expected payoffs are taken more often and that an all-else-equal increase in the payoff to some action means it is played even more often. Friedman and Mauersberger (2022) study symmetric QRE, a refinement of regular QRE, whereby the quantal response function also satisfies various symmetries across players and actions. 1 In this paper, we consider both regular and symmetric QRE.…”

Section: Introductionmentioning

confidence: 99%

“…3 This establishes the main insight that is relevant to our paper: by imposing only weak restrictions on quantal response, the resulting set of QRE is a tractable object. Friedman and Mauersberger (2022) refines regular QRE by augmenting it with various forms of symmetry across players and actions, and show how to analyze the resulting sets of equilibria. 4 In binaryaction games, the model is similarly tractable as regular QRE and implies much tighter bounds on the models nested within it, such as logit.…”

Section: Introductionmentioning

confidence: 99%

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Quantal Response Equilibrium with Symmetry

Friedman

Mauersberger²

2022

Proceedings of the 23rd ACM Conference on Economics and Computation

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Quantal response equilibrium (QRE), a statistical generalization of Nash equilibrium, is a standard benchmark in the analysis of experimental data. Despite its influence, nonparametric characterizations and tests of QRE are unavailable beyond the case of finite games. We address this gap by completely characterizing the set of QRE in a class of binary-action games with a continuum of types. Our characterization provides sharp predictions in settings such as global games, the volunteer's dilemma, and the compromise game. Further, we leverage our results to develop nonparametric tests of QRE. As an empirical application, we revisit the experimental data from Carrillo and Palfrey (2009) on the compromise game.

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“…Following Friedman and Mauersberger (2022), whenever Q satisfies (R1)-( R4) and (S1)-(S2), we refer to the resulting model as symmetric QRE or SQRE.…”

Section: Quantal Response Equilibriummentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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