Discerning Solution Concepts

Nail Kashaev and Bruno Salcedo
Additional contact information
Bruno Salcedo: University of Western Ontario, https://economics.uwo.ca/

No 20193, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: The empirical analysis of discrete complete-information games has relied on behavioral restrictions in the form of solution concepts, such as Nash equilibrium. Choosing the right solution concept is crucial not just for identification of payoff parameters, but also for the validity and informativeness of counterfactual exercises and policy implications. We say that a solution concept is discernible if it is possible to determine whether it generated the observed data on the players’ behavior and covariates. We propose a set of conditions that make it possible to discern solution concepts. In particular, our conditions are sufficient to tell whether the players’ choices emerged from Nash equilibria. We can also discern between rationalizable behavior, maxmin behavior, and collusive behavior. Finally, we identify the correlation structure of unobserved shocks in our model using a novel approach.

Keywords: Discrete Games; Testability; Identification; Incomplete Models; Market Entry (search for similar items in EconPapers)
JEL-codes: C52 C72 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ir.lib.uwo.ca/cgi/viewcontent.cgi?article=1828&context=economicsresrpt (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
Working Paper: Discerning Solution Concepts (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uwo:uwowop:20193

Ordering information: This working paper can be ordered from
https://economics.uw ... itting_ordering.html
The price is Paper copy available by mail at a cost of $10.00 Canadian each.

Access Statistics for this paper

More papers in University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics Department of Economics, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2.
Bibliographic data for series maintained by ().