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Nonparametric Sharp Bounds For Payoffs In 2 × 2 Games

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  • Marc HENRY
  • Ismael MOURIFIÉ

Abstract

We derive the empirical content of Nash equilibrium in 2×2 games of perfect information, including duopoly entry and coordination games. The derived bounds are nonparametric intersection bounds and are simple enough to lend themselves to existing inference methods. Implications of pure strategy Nash equilibrium and of exclusion restrictions are also derived. Without further assumptions, the hypothesis of Nash equilibrium play is not falsifiable. However, nontrivial bounds hold for the extent of potential monopoly advantage or free riding incentives.

Suggested Citation

  • Marc HENRY & Ismael MOURIFIÉ, 2013. "Nonparametric Sharp Bounds For Payoffs In 2 × 2 Games," Working Papers tecipa-500, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-500
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    References listed on IDEAS

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    More about this item

    Keywords

    participation games; partial identification; intersection bounds;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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