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Econometric analysis of games with multiple equilibria

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  • Áureo de Paula

Abstract

This article reviews the recent literature on the econometric analysis of games where multiple solutions are possible. Multiplicity does not necessarily preclude the estimation of a particular model (and in certain cases even improves its identification), but ignoring it can lead to misspecifications. The survey starts with a general characterisation of structural models that highlights how multiplicity affects the classical paradigm. Because the information structure is an important guide to identification and estimation strategies, I discuss games of complete and incomplete information separately. Whereas many of the techniques discussed in the article can be transported across different information environments, some of them are specific to particular models. I also survey models of social interactions in a different section. I close with a brief discussion of post-estimation issues and research prospects.

Suggested Citation

  • Áureo de Paula, 2012. "Econometric analysis of games with multiple equilibria," CeMMAP working papers 29/12, Institute for Fiscal Studies.
    • Handle: RePEc:azt:cemmap:29/12
    DOI: 10.1920/wp.cem.2012.2912
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    More about this item

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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