Jump to ContentJump to Main Navigation
Quantal Response EquilibriumA Stochastic Theory of Games$
Users without a subscription are not able to see the full content.

Jacob K. Goeree, Charles A. Holt, and Thomas R. Palfrey

Print publication date: 2016

Print ISBN-13: 9780691124230

Published to University Press Scholarship Online: January 2018

DOI: 10.23943/princeton/9780691124230.001.0001

Show Summary Details
Page of
date: 27 February 2020

Applications to Economics

Applications to Economics

(p.248) 9 Applications to Economics
Quantal Response Equilibrium

Jacob K. Goeree

Charles A. Holt

Thomas R. Palfrey

Princeton University Press

This chapter explores whether the equilibrium effects of noisy behavior can cause large deviations from standard predictions in economically relevant situations. It considers a simple price-competition game, which is also partly motivated by the possibility of changing a payoff parameter that has no effect on the unique Nash equilibrium, but which may be expected to affect quantal response equilibrium. In the minimum-effort coordination game studied, any common effort in the range of feasible effort levels is a Nash equilibrium, but one would expect that an increase in the cost of individual effort or an increase in the number of players who are trying to coordinate would reduce the effort levels observed in an experiment. The chapter presents an analysis of the logit equilibrium and rent dissipation for a rent-seeking contest that is modeled as an “all-pay auction.” The final two applications in this chapter deal with auctions with private information.

Keywords:   noisy behavior, quantal response equilibrium, QRE, price-competition game, minimum-effort coordination game, Nash equilibrium, logit equilibrium, rent dissipation, auctions

University Press Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us .