Statistical prediction of the outcome of a noncooperative game
Conventionally, game theory predicts that the mixed strategy profile of players in a noncooperative game will satisfy some equilibrium concept. Relative probabil- ities of the strategy profiles satisfying the concept are unspecified, and all strategies not satisfying it are implicitly assigned probability zero. As an alternative, we re- cast the prediction problem of game theory as statistically estimating the strategy profile, from "data" that consists of the game specification. This replaces the focus of game theory, on specifying a set of "equilibrium" mixed strategies, with a new focus, on specifying a probability density over all mixed strategies. We explore a Bayesian version of such a Predictive Game Theory (PGT). We show that for some games the peaks of the posterior over strategy profiles approximate quantal response equilibria. We also show how PGT provides a best single prediction for any noncooperative game, i.e., a universal refinement. We also show how regula- tors can use PGT to make optimal decisions in situations where conventional game theory cannot provide advice.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert C. Feenstra, 2006. "New Evidence on the Gains from Trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(4), pages 617-641, December.
- Alejandro Castañeda Sabido & David Mulato, 2006. "Market Structure: Concentration and Imports as Determinants of Industry Margins," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 21(2), pages 177-202.
- Luis Miguel Galindo & Jaime Ros, 2008. "Alternatives to inflation targeting in Mexico," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(2), pages 201-214.
- Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999.
"Income distribution, factor endowments, and trade openness,"
Journal of Development Economics,
Elsevier, vol. 59(1), pages 77-101, June.
- Antonio Spilimbergo & Juan Luis Londoño & Miguel Székely, 1997. "Income Distribution, Factor Endowments, and Trade Openness," IDB Publications (Working Papers) 6803, Inter-American Development Bank.
- Antonio Spilimbergo & Juan Luis Londoño & Miguel Székely, 1997. "Income Distribution, Factor Endowments, and Trade Openness," Research Department Publications 4088, Inter-American Development Bank, Research Department.
- Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
- Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras," NBER Working Papers 5122, National Bureau of Economic Research, Inc.
- Gary Clyde Hufbauer & Jeffrey J. Schott, 1992. "North American Free Trade: Issues and Recommendations," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 71, January.
- Chiquiar, Daniel, 2008. "Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico," Journal of International Economics, Elsevier, vol. 74(1), pages 70-93, January.
- Daniel Chiquiar, 2004. "Globalization, Regional Wage Differentials and the Stolper-Samuelson Theorem: Evidence from México," Working Papers 2004-06, Banco de México.
- Robert C. Feenstra & Hiau Looi Kee, 2007. "Trade Liberalisation and Export Variety: A Comparison of Mexico and China," The World Economy, Wiley Blackwell, vol. 30(1), pages 5-21, 01.
- Moreno-Brid, Juan Carlos & Ros, Jaime, 2009. "Development and Growth in the Mexican Economy: An Historical Perspective," OUP Catalogue, Oxford University Press, number 9780195371161.
- Razmi, Arslan, 2007. "Pursuing manufacturing-based export-led growth: Are developing countries increasingly crowding each other out?," Structural Change and Economic Dynamics, Elsevier, vol. 18(4), pages 460-482, December.
- Lopez-Acevedo, Gladys, 2006. "Mexico : two decades of the evolution of education and inequality," Policy Research Working Paper Series 3919, The World Bank.
- Leamer, Edward E, 1980. "The Leontief Paradox, Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 495-503, June.
- Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
- Ann Harrison & Gordon Hanson, 1999. "Who Gains from Trade Reform? Some Remaining Puzzles," NBER Working Papers 6915, National Bureau of Economic Research, Inc.
- Dani Rodrik, 1997. "Has Globalization Gone Too Far?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 57, November.
- Cragg, Michael Ian & Epelbaum, Mario, 1996. "Why has wage dispersion grown in Mexico? Is it the incidence of reforms or the growing demand for skills?," Journal of Development Economics, Elsevier, vol. 51(1), pages 99-116, October. Full references (including those not matched with items on IDEAS)