Description
Quantal Response Equilibrium presents a stochastic theory of games that unites probabilistic choice models developed in psychology and statistics with the Nash equilibrium approach of classical game theory. Nash equilibrium assumes precise and perfect decision making in games, but human behavior is inherently stochastic and people realize that the behavior of others is not perfectly predictable. In contrast, QRE models choice behavior as probabilistic and extends classical game theory into a more realistic and useful framework with broad applications for economics, political science, management, and other social sciences.
Quantal Response Equilibrium spans the range from basic theoretical foundations to examples of how the principles yield useful predictions and insights in strategic settings, including voting, bargaining, auctions, public goods provision, and more. The approach provides a natural framework for estimating the effects of behavioral factors like altruism, reciprocity, risk aversion, judgment fallacies, and impatience. New theoretical results push the frontiers of models that include heterogeneity, learning, and well-specified behavioral modifications of rational choice and rational expectations. The empirical relevance of the theory is enhanced by discussion of data from controlled laboratory experiments, along with a detailed users' guide for estimation techniques.
Quantal Response Equilibrium makes pioneering game-theoreti
Chapter
2.5 Structural Approach to QRE
2.5.1 An Equilibrium Model of Action Trembles
2.5.2 Structural QRE: An Equilibrium Model of Payoff Trembles
2.6 On the Empirical Content of QRE
2.6.1 Empirical Restrictions of Regular QRE
2.6.2 Empirical Restrictions of Structural QRE
2.6.3 Regularity with Structural QRE
2.6.4 Structural versus Reduced-Form QRE
2.7 QRE for Continuous Games
3. Quantal Response Equilibrium in Extensive-Form Games
3.1 Regular QRE for Extensive-Form Games
3.2 Structural AQRE for Extensive-Form Games
3.2.2 Agent Quantal Response Equilibrium
3.4 AQRE Analysis of the Centipede Game
4.1 Skill and Role Heterogeneity
4.1.1 Systematic Heterogeneity Depending on Player Roles
4.1.2 Idiosyncratic Heterogeneity
4.2 Heterogeneous Quantal Response Equilibrium
4.3 Skill Heterogeneity without Rational Expectations
4.3.1 Egoistic Beliefs about Opponents
4.3.2 Unconstrained Point Beliefs about Opponents’ Skill
4.4 QRE without Rational Expectations
4.4.1 Subjective Heterogeneous QRE
4.4.2 Truncated QRE and Cognitive Hierarchy
4.5.1 Noisy Rationalizability
4.5.2 Noisy Introspection in Extensive-Form Games
5.1 QRE in Infinitely Repeated Games
5.1.2 A Finite Recursive Form for Repeated Games
5.2 QRE in Dynamic and Stochastic Games
5.2.1 Markov Perfect Equilibrium
5.3 Evolutionary Dynamics and Logit QRE
5.4 Stochastic Learning Equilibrium
5.4.1 Some Alternative Learning Rules
5.4.2 Beliefs and Probabilistic Choice
5.4.4 Stochastic Learning Equilibrium
6. QRE as a Structural Model for Estimation
6.1 The QRE Estimation Approach
6.1.1 Estimation Program for Generalized Matching Pennies
6.2 Estimation and Methodological Issues
6.2.1 Multiple Equilibria
6.2.3 Unobserved Heterogeneity
7. Applications to Game Theory
7.1 The Traveler’s Dilemma
7.1.1 Traveler’s Dilemma Experimental Data
7.1.2 Logit QRE Claim Distributions
7.2.1 Simultaneous versus Sequential Compromise Games
7.2.2 The Logic of Equilibrium
7.2.3 QRE with Continuous Types and Binary Action Spaces
7.2.4 Estimating QRE, TQRE, and a-Cursed QRE
7.4.1 Banks, Camerer, and Porter (1994)
7.4.2 Brandts and Holt (1992, 1993)
7.5.3 AQRE in the Information Cascade Game
7.5.4 Belief Dynamics Implied by QRE
7.5.5 An Experiment on Self-Correcting Cascades
8. Applications to Political Science
8.1.1 General Participation Games
8.1.2 Participation Games with Negative Externalities
8.1.3 Participation Games with Positive Externalities
8.1.4 Positive and Negative Externalities in Voting Games
8.2 Incomplete Information and Voter Turnout
8.2.1 QRE Model of Turnout with Private Information
8.2.3 Asymptotic Voter Turnout Predicted by QRE
8.3 Information Aggregation by Voting
8.3.1 Rational Strategic Voting in Juries
8.3.3 QRE Voting in Juries
8.4 Markov QRE and Dynamic Legislative Bargaining
8.4.1 Approximating MPE by Logit MQRE
8.4.2 Steady-State Equilibrium Dynamics
8.4.3 Using MQRE for Estimation
9. Applications to Economics
9.1 Imperfect Price Competition
9.1.1 Learning and Convergence to Equilibrium
9.1.2 Logit QRE and Logit SLE Price Distributions
9.2 Minimum-Effort Coordination Games
9.2.1 Stochastic Potential and Logit QRE
9.2.2 A Coordination-Game Experiment
9.3.2 Own-Payoff Effects in Asymmetric All-Pay Auctions
9.4 Private-Value Auctions
9.4.1 Two Simple Auction Games
9.5 Common-Value Auctions
9.5.1 The Maximum-Value Auction Game
9.5.2 Logit QRE for the Maximum-Value Auction Game
9.5.3 Estimating HQRE for the Maximum-Value Auction Game
10. Epilogue: Some Thoughts about Future Research
10.1.2 Correlated Equilibrium, Preplay Communication, and Mechanism Design
10.1.3 Endogenizing the Quantal Response Parameter
10.2.1 Bargaining Games: Legislative Bargaining, Offer/Counteroffer
10.2.2 The Winner’s Curse
Quantal Response Equilibrium
：A Stochastic Theory of Games
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