Endogeneous quantal response equilibrium for normal form games

Gressani, Oswaldo
(2015) Public Economic Theory Conference — Location: Luxembourg (1.July.2015)

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Authors
  • Gressani, OswaldoUCLouvain
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Abstract
We develop an equilibrium concept coined Endogeneous Quantal Response Equilibrium (EQRE) based on heterogeneous players and endogeneous learning in a logistic quantal choice model. Each player has an asymptotically consistent estimate of his rival’s rationality index and is able to choose his own rationality level according to a cost-benefit tradeoff. This approach allows to enrich bounded rationality models by incorporating heterogeneous skills and by bridging the gap between stylized facts on the rationality index dynamics and a learning dimension.
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Gressani, O. (2015). Endogeneous quantal response equilibrium for normal form games. Public Economic Theory Conference, Luxembourg. https://hdl.handle.net/2078.5/184359