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On the Empirical Content of Quantal Response Equilibrium

  • Philip A. Haile

    ()

    (Yale University, Faculty of Arts & Sciences, Department of Economics (Box 8264))

  • Ali Hortacsu

    ()

    (University of Chicago, Department of Economics)

  • Grigory Kosenok

    ()

    (New Economic School)

The quantal response equilibrium (QRE) notion of McKelvey and Palfrey (1995) has recently attracted considerable attention, due largely to its widely documented ability to rationalize observed behavior in games played by experimental subjects. We show that this ability to fit the data, as typically measured in this literature, is uninformative. Without a priori distributional assumptions, a QRE can match any distribution of behavior by each player in any normal form game. We discuss approaches that might be taken to provide valid empirical evaluation of the QRE and discuss its potential value as an approximating empirical structure.

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Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number ysm421.

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Date of creation: 28 Jul 2004
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Handle: RePEc:ysm:somwrk:ysm421
Contact details of provider: Web page: http://icf.som.yale.edu/
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