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Identification of Potential Games and Demand Models for Bundles

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  • Jeremy T. Fox
  • Natalia Lazzati

Abstract

This paper studies nonparametric identification in binary choice games of complete information. We allow for correlated unobservables across players. We propose conditions under which the binary choice game is a so-called potential game and impose that the selected equilibrium maximizes its associated potential function. Our framework is formally equivalent to a multinomial choice demand model where a consumer can elect to purchase any bundle of products. We present a separate identification result for two-player games that does not rely on equilibrium selection.

Suggested Citation

  • Jeremy T. Fox & Natalia Lazzati, 2012. "Identification of Potential Games and Demand Models for Bundles," NBER Working Papers 18155, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18155
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    Cited by:

    1. Christoph Breunig & Stefan Hoderlein, 2018. "Specification testing in random coefficient models," Quantitative Economics, Econometric Society, vol. 9(3), pages 1371-1417, November.
    2. Fabian Dunker & Stefan Hoderlein & Hiroaki Kaido, 2013. "Random coefficients in static games of complete information," CeMMAP working papers CWP12/13, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    3. Kline, Brendan, 2015. "Identification of complete information games," Journal of Econometrics, Elsevier, vol. 189(1), pages 117-131.
    4. Christoph Breunig & Stefan Hoderlein, 2016. "Nonparametric Specification Testing in Random Parameter Models," Boston College Working Papers in Economics 897, Boston College Department of Economics.

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    More about this item

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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