Testing for Monotone Equilibrium Strategies in Games of Incomplete Information

Yu-Chin Hsu, Tong Li, Chu-An Liu and Hidenori Takahashi

Papers from arXiv.org

Abstract: This paper develops a unified framework for testing monotonicity of Bayesian Nash equilibrium strategies in unobserved types in games of incomplete information. We show that, under symmetric independent private types, monotonicity of differentiable equilibrium strategies is equivalent to monotonicity of a quasi-inverse strategy identified from observed actions. This allows the problem to be reformulated as testing a countable set of moment inequalities involving unconditional expectations. We propose a Cramer-von Mises-type statistic with bootstrap critical values. The method accommodates covariates and game heterogeneity. Monte Carlo simulations demonstrate finite-sample performance, and an application to procurement auctions illustrates cartel detection.

Date: 2026-04
New Economics Papers: this item is included in nep-mic
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2604.06643 Latest version (application/pdf)

Related works:
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:arx:papers:2604.06643

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().