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Set Identification in Models with Multiple Equilibria

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  • Alfred Galichon
  • Marc Henry

Abstract

We propose a computationally feasible way of deriving the identified features of models with multiple equilibria in pure or mixed strategies. It is shown that in the case of Shapley regular normal form games, the identified set is characterized by the inclusion of the true data distribution within the core of a Choquet capacity, which is interpreted as the generalized likelihood of the model. In turn, this inclusion is characterized by a finite set of inequalities and efficient and easily implementable combinatorial methods are described to check them. In all normal form games, the identified set is characterized in terms of the value of a submodular or convex optimization program. Efficient algorithms are then given and compared to check inclusion of a parameter in this identified set. The latter are illustrated with family bargaining games and oligopoly entry games.

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  • Alfred Galichon & Marc Henry, 2021. "Set Identification in Models with Multiple Equilibria," Papers 2102.12249, arXiv.org.
  • Handle: RePEc:arx:papers:2102.12249
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    References listed on IDEAS

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    1. Vives, Xavier, 1990. "Nash equilibrium with strategic complementarities," Journal of Mathematical Economics, Elsevier, vol. 19(3), pages 305-321.
    2. Rosen, Adam M., 2008. "Confidence sets for partially identified parameters that satisfy a finite number of moment inequalities," Journal of Econometrics, Elsevier, vol. 146(1), pages 107-117, September.
    3. Andrew Sweeting, 2005. "Coordination Games, Multiple Equilibria and the Timing of Radio Commercials," 2005 Meeting Papers 490, Society for Economic Dynamics.
    4. Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(1), pages 147-165.
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