Estimation of Discrete Games with Weak Assumptions on Information

Lorenzo Magnolfi and Camilla Roncoroni

The Review of Economic Studies, 2023, vol. 90, issue 4, 2006-2041

Abstract: We propose a method to estimate static discrete games with weak assumptions onthe information available to players. We do not fully specify the information structure of the game but allow instead for all information structures consistent with players knowing their own payoffs. To make this approach tractable, we adopt as a solution concept Bayes correlated equilibrium (BCE). We characterize the sharp identified set under BCE and unrestricted equilibrium selection, and find that in simple games with limited variation in covariates identified sets are informative. In an application, we estimate a model of entry in the Italian supermarket industry and quantify the effect of large malls on local supermarkets. Estimates and predictions differ from those obtained under more restrictive assumptions.

Keywords: Estimation of games; Bayes correlated equilibrium; Entry models; Partial identification; Supermarket industry; C57; L10 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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