A Refinement of Logit Quantal Response Equilibrium

Pavlo Blavatskyy ()
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Pavlo Blavatskyy: Montpellier Business School, Montpellier Research in Management, 2300 Avenue des Moulins, 34090 Montpellier, France

International Game Theory Review (IGTR), 2018, vol. 20, issue 02, 1-14

Abstract: Unlike the Nash equilibrium, logit quantal response equilibrium is affected by positive affine transformations of players’ von Neumann–Morgenstern utility payoffs. This paper presents a modification of a logit quantal response equilibrium that makes this equilibrium solution concept invariant to arbitrary normalization of utility payoffs. Our proposed modification can be viewed as a refinement of logit quantal response equilibria: instead of obtaining a continuum of equilibria (for different positive affine transformations of utility function) we now obtain only one equilibrium for all possible positive affine transformations of utility function. We define our refinement for simultaneous-move noncooperative games in the normal form.

Keywords: Equilibrium solution concept; Nash equilibrium; quantal response equilibrium; simultaneous-move noncooperative game; normal form (search for similar items in EconPapers)
JEL-codes: C72 D81 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1142/S0219198918500044

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