Endogenous quantal response equilibrium

Stochastic Equilibria: Noise in Actions or Beliefs?

“…Second, to study extensive-form games, we introduce agent NBE, which applies 24 Beyond applying to all structural QRE models with i.i.d. errors and many nonstructural models, the theorem also applies to structural models like that of Friedman (2020) for which Q is regular and translation invariant despite being generated via errors whose variance depends on v i . 25 To make the CDF well defined, we resolve indeterminacies as follows:…”

Cognitive Imprecision and Strategic Behavior

“…For other models of strategic interaction with stochastic choice, seeGoeree and Holt (2004),Friedman and Mezzetti (2005), Gonçalves (2020), andGoeree and Louis (Forthcoming).17 In related work,Friedman (2020) proposes a model that endogenizes the precision parameter in QRE, though it is the set of payoffs in the current game that determine the precision parameter -rather than the distribution of payoffs within a class of games, as in our model.…”

Information-Constrained Coordination of Economic Behavior

“…This assumes that the QRE parameter specifying the sensitivity of choice to the expected payoff difference (analogous to the parameter ψ in ( 14)) should remain the same across environments. Friedman (2020) instead proposes a generalization of standard QRE modeling in which the precision parameter is endogenously determined for a particular game. However, endogenizing the precision parameter for each possible game (i.e., each possible payoff matrix) still implies that equilibrium action selection probabilities should be determinate functions of x, independently of the prior from which x is drawn; thus without introducing cognitive imprecision of additional sort (as in our approach), there would still be no reason for observed behavior to differ across the two treatments of Frydman and Nunnari (2022).…”