Estimating Supermodular Games Using Rationalizable Strategies

Kosuke Uetake and Yasutora Watanabe

A chapter in Structural Econometric Models, 2013, vol. 31, pp 233-247 from Emerald Group Publishing Limited

Abstract: We propose a set-estimation approach to supermodular games using the restrictons of rationalizable strategies, which is a weaker solution concept than Nash equilibrium. The set of rationalizable strategies of a supermodular game forms a complete lattice, and are bounded above and below by two extremal Nash equilibria. We use a well-known alogrithm to compute the two extremal equilibria, and then construct moment inequalities for set estimation of the supermodular game. Finally, we conduct Monte Carlo experiments to illustrate how the estimated confidence sets vary in response to changes in the data generating process.

Keywords: Supermodular games; rationalizability; moment inequalities; C13; C81 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:aecozz:s0731-9053(2013)0000032008

DOI: 10.1108/S0731-9053(2013)0000032008

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