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Quantal Response Equilibrium with Non-Monotone Probabilities: A Dynamic Approach

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  • Suren Basov

Abstract

In this paper I will give an example of a population game and of a locally improving stochastic learning process such that the quantal response equilibrium assigns to the different strategies the probabilities that are non-monotone in the payoffs. Moreover, if the initial state probabilities are payoff-monotone, then the learning can be shown the shrink mistakes in one direction and exacerbate them in the other direction.

Suggested Citation

  • Suren Basov, 2003. "Quantal Response Equilibrium with Non-Monotone Probabilities: A Dynamic Approach," Department of Economics - Working Papers Series 880, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:880
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    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-03/880.pdf
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    References listed on IDEAS

    as
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    4. Suren Basov, 2005. "Bounded rationality: static versus dynamic approaches," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(4), pages 871-885, June.
    5. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 2001. "Minimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium," Games and Economic Behavior, Elsevier, vol. 34(2), pages 177-199, February.
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    More about this item

    Keywords

    quantal response equilibrium; dynamic probabilistic choice models;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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