Approximate Quantal Response Equilibria in Bargaining

Luis G. Gonzalez ()

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: The Nash Bargaining problem in the context of a random utility model yields a stochastic demand for each player, conditional on his or her beliefs regarding the other player's behavior. We derive a symmetric logit equilibrium under naive expectations that converges to the Nash axiomatic solution as noise in utility vanishes. A numerical approximation to the symmetric logit equilibrium under rational expectations (Quantal Response Equilibrium) solution is also computed.

Pages: 9 pages
Date: 2005-01
New Economics Papers: this item is included in nep-dcm and nep-gth
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