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Quantal Response EquilibriumA Stochastic Theory of Games$
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Jacob K. Goeree, Charles A. Holt, and Thomas R. Palfrey

Print publication date: 2016

Print ISBN-13: 9780691124230

Published to Princeton Scholarship Online: January 2018

DOI: 10.23943/princeton/9780691124230.001.0001

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Quantal Response Equilibrium in Extensive-Form Games

Quantal Response Equilibrium in Extensive-Form Games

(p.63) 3 Quantal Response Equilibrium in Extensive-Form Games
Quantal Response Equilibrium

Jacob K. Goeree

Charles A. Holt

Thomas R. Palfrey

Princeton University Press

This chapter lays out the general theory of quantal response equilibrium (QRE) for extensive-form games. The formulation of the model is necessarily more complicated because timing and information now play a direct role in the decision maker's choice. This can have interesting and unanticipated consequences. It first describes four possible ways to define QRE in extensive-form games, depending on how the games are represented. It then turns to the structural agent quantal response equilibrium (AQRE) extensive-form games. This is followed by a discussion of the logit AQRE model, which implies a unique selection from the set of Nash equilibria. This selection is defined by the connected component of the logit AQRE correspondence. The final section presents an AQRE analysis of the centipede game.

Keywords:   quantal response equilibrium, QRE, extensive-form games, agent quantal response equilibrium, AQRE

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