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On the Empirical Content of Quantal Response Equilibrium

  • Philip A. Haile
  • Ali Hortacsu
  • Grigory Kosenok

The quantal response equilibrium (QRE) notion of McKelvey and Palfrey (1995) has recently attracted considerable attention, due in part to its widely documented ability to rationalize observed behavior in games played by experimental subjects. However, even with strong a priori restrictions on unobservables, QRE imposes no falsifiable restrictions: it can rationalize any distribution of behavior in any normal form game. After demonstrating this, we discuss several approaches to testing QRE under additional maintained assumptions.

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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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