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A Refinement of Logit Quantal Response Equilibrium

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  • Pavlo Blavatskyy

    (Montpellier Business School, Montpellier Research in Management, 2300 Avenue des Moulins, 34090 Montpellier, France)

Abstract

Unlike the Nash equilibrium, logit quantal response equilibrium is affected by positive affine transformations of players’ von Neumann–Morgenstern utility payoffs. This paper presents a modification of a logit quantal response equilibrium that makes this equilibrium solution concept invariant to arbitrary normalization of utility payoffs. Our proposed modification can be viewed as a refinement of logit quantal response equilibria: instead of obtaining a continuum of equilibria (for different positive affine transformations of utility function) we now obtain only one equilibrium for all possible positive affine transformations of utility function. We define our refinement for simultaneous-move noncooperative games in the normal form.

Suggested Citation

  • Pavlo Blavatskyy, 2018. "A Refinement of Logit Quantal Response Equilibrium," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 20(02), pages 1-14, June.
    • Handle: RePEc:wsi:igtrxx:v:20:y:2018:i:02:n:s0219198918500044
    DOI: 10.1142/S0219198918500044
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    More about this item

    Keywords

    Equilibrium solution concept; Nash equilibrium; quantal response equilibrium; simultaneous-move noncooperative game; normal form;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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