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Estimation of discrete games with weak assumptions on information
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Magnolfi, Lorenzo and Roncoroni, Camilla (2023) Estimation of discrete games with weak assumptions on information. The Review of Economic Studies, 90 (4). pp. 2006-2041. doi:10.1093/restud/rdac058 ISSN 0034-6527.
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Official URL: http://dx.doi.org/10.1093/restud/rdac058
Abstract
We propose a method to estimate static discrete games with weak assumptions on the 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.
Item Type: | Journal Article | ||||||||
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Divisions: | Faculty of Social Sciences > Economics | ||||||||
Journal or Publication Title: | The Review of Economic Studies | ||||||||
Publisher: | Oxford University Press | ||||||||
ISSN: | 0034-6527 | ||||||||
Official Date: | July 2023 | ||||||||
Dates: |
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Volume: | 90 | ||||||||
Number: | 4 | ||||||||
Page Range: | pp. 2006-2041 | ||||||||
DOI: | 10.1093/restud/rdac058 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
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