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Empirical Equilibrium

Rodrigo Velez () and Alexander Brown ()

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Abstract: We introduce empirical equilibrium, a refinement of Nash equilibrium. In contrast to previous refinements in the literature, empirical equilibrium is based solely on observables and does not determine as implausible all weakly dominated behavior. We show that a distribution of play is an empirical equilibrium if and only if it is the limit of regular Quantal Response Equilibria associated with quantal responses that are utility maximizing in the limit. This result provides a direct link between the practice of experimental economics and our refinement.

New Economics Papers: this item is included in nep-des, nep-exp and nep-gth
Date: 2018-04, Revised 2019-05
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