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A Dynamic Homotopy Interpretation of Quantal Response Equilibrium Correspondences

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Author Info
Theodore L. Turocy (Texas A&M University)

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Abstract

This paper uses properties of the logistic quantal response equilibrium correspondence to compute Nash equilibria in nite games. It is shown that branches of the correspondence may be numerically traversed e ciently and securely. The method can be implemented on a multicomputer, allowing for application to large games. The path followed by the method has an interpretation analogous to Harsanyi and Selten's Tracing Procedure. As an application, it is shown that the principal branch of any quantal response equilibrium correspondence satisfying a monotonicity property converges to the risk-dominant equilibrium in 2x2 games.

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File URL: http://129.3.20.41/eps/game/papers/0212/0212001.pdf
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Publisher Info
Paper provided by EconWPA in its series Game Theory and Information with number 0212001.

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Length: 26 pages
Date of creation: 02 Dec 2002
Date of revision: 16 Oct 2003
Handle: RePEc:wpa:wuwpga:0212001

Note: Type of Document - PDF; prepared on Linux; pages: 26 ; figures: none
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Web page: http://129.3.20.41

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Related research
Keywords: noncooperative games computation of Nash equilibrium quantal response logit equilibrium.

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software

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  1. Charles A. Holt & Jacob K. Goeree, 1999. "Stochastic Game Theory: For Playing Games, Not Just for Doing Theory," Virginia Economics Online Papers 306, University of Virginia, Department of Economics. [Downloadable!]
  2. Wilson, Robert, 1992. "Computing Simply Stable Equilibria," Econometrica, Econometric Society, vol. 60(5), pages 1039-70, September. [Downloadable!] (restricted)
  3. Herings, P. Jean-Jacques & van den Elzen, Antoon, 2002. "Computation of the Nash Equilibrium Selected by the Tracing Procedure in N-Person Games," Games and Economic Behavior, Elsevier, vol. 38(1), pages 89-117, January. [Downloadable!] (restricted)
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  4. Govindan, Srihari & Wilson, Robert, 2004. "Computing Nash equilibria by iterated polymatrix approximation," Journal of Economic Dynamics and Control, Elsevier, vol. 28(7), pages 1229-1241, April. [Downloadable!] (restricted)
  5. Richard Mckelvey & Thomas Palfrey, 1998. "Quantal Response Equilibria for Extensive Form Games," Experimental Economics, Springer, vol. 1(1), pages 9-41, June. [Downloadable!] (restricted)
  6. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 2001. "Minimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium," Games and Economic Behavior, Elsevier, vol. 34(2), pages 177-199, February. [Downloadable!] (restricted)
  7. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July. [Downloadable!] (restricted)
  8. Ed Hopkins, 2002. "Two Competing Models of How People Learn in Games," Econometrica, Econometric Society, vol. 70(6), pages 2141-2166, November. [Downloadable!] (restricted)
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  9. Govindan, Srihari & Wilson, Robert, 2003. "A global Newton method to compute Nash equilibria," Journal of Economic Theory, Elsevier, vol. 110(1), pages 65-86, May. [Downloadable!] (restricted)
  10. Yamamoto, Yoshitsugu, 1993. "A Path-Following Procedure to Find a Proper Equilibrium of Finite Games," International Journal of Game Theory, Springer, vol. 22(3), pages 249-59.
  11. Palfrey, Thomas R. & Goeree, Jacob & Holt, Charles, 2000. "Quantal Response Equilibrium and Overbidding in Private-value Auctions," Working Papers 1073, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
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  12. Kohlberg, Elon & Mertens, Jean-Francois, 1986. "On the Strategic Stability of Equilibria," Econometrica, Econometric Society, vol. 54(5), pages 1003-37, September. [Downloadable!] (restricted)
  13. Thomas Palfrey, 2002. "Quantal Response Equilibrium and Overbidding in Private Value Auctions," Theory workshop papers 357966000000000089, UCLA Department of Economics. [Downloadable!]
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