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Endogeneous Quantal Response Equilibrium for Normal Form Games

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  • Gressani, O.

    (Université catholique de Louvain, CORE, Belgium)

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 con- sistent estimate of his rival’s rationality index and is able to choose his own rationality level according to a cost-benefit tradeo. 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.

Suggested Citation

  • Gressani, O., 2015. "Endogeneous Quantal Response Equilibrium for Normal Form Games," LIDAM Discussion Papers CORE 2015053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2015053
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    References listed on IDEAS

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