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On the Empirical Content of Quantal Response Equilibrium

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  • Philip A. Haile
  • Ali Hortacsu
  • Grigory Kosenok

Abstract

The quantal response equilibrium (QRE) notion of McKelvey and Palfrey (1995) has recently attracted considerable attention, due largely to its widely documented ability to rationalize observed behavior in games played by experimental subjects. We show that this ability to fit the data, as typically measured in this literature, is uninformative. Without a priori distributional assumptions, a QRE can match any distribution of behavior by each player in any normal form game. We discuss approaches that might be taken to provide valid empirical evaluation of the QRE and discuss its potential value as an approximating empirical structure.

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Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 666156000000000215.

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Date of creation: 21 Aug 2003
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Handle: RePEc:cla:levrem:666156000000000215

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