Identification and Estimation of a Discrete Game of Complete Information
We discuss the identification and estimation of discrete games of complete information. Following Bresnahan and Reiss (1990, 1991), a discrete game is a generalization of a standard discrete choice model where utility depends on the actions of other players. Using recent algorithms to compute all of...
| Main Authors: | , , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
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Econometric Society / Wiley
2011
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| Online Access: | http://hdl.handle.net/1721.1/64678 |
| _version_ | 1811086090530979840 |
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| author | Bajari, Patrick Hong, Han Ryan, Stephen |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Bajari, Patrick Hong, Han Ryan, Stephen |
| author_sort | Bajari, Patrick |
| collection | MIT |
| description | We discuss the identification and estimation of discrete games of complete information. Following Bresnahan and Reiss (1990, 1991), a discrete game is a generalization of a standard discrete choice model where utility depends on the actions of other players. Using recent algorithms to compute all of the Nash equilibria to a game, we propose simulation-based estimators for static, discrete games. We demonstrate that the model is identified under weak functional form assumptions using exclusion restrictions and an identification at infinity approach. Monte Carlo evidence demonstrates that the estimator can perform well in moderately sized samples. As an application, we study entry decisions by construction contractors to bid on highway projects in California. We find that an equilibrium is more likely to be observed if it maximizes joint profits, has a higher Nash product, uses mixed strategies, and is not Pareto dominated by another equilibrium. |
| first_indexed | 2024-09-23T13:20:44Z |
| format | Article |
| id | mit-1721.1/64678 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T13:20:44Z |
| publishDate | 2011 |
| publisher | Econometric Society / Wiley |
| record_format | dspace |
| spelling | mit-1721.1/646782022-10-01T14:40:29Z Identification and Estimation of a Discrete Game of Complete Information Bajari, Patrick Hong, Han Ryan, Stephen Massachusetts Institute of Technology. Department of Economics Ryan, Stephen Ryan, Stephen We discuss the identification and estimation of discrete games of complete information. Following Bresnahan and Reiss (1990, 1991), a discrete game is a generalization of a standard discrete choice model where utility depends on the actions of other players. Using recent algorithms to compute all of the Nash equilibria to a game, we propose simulation-based estimators for static, discrete games. We demonstrate that the model is identified under weak functional form assumptions using exclusion restrictions and an identification at infinity approach. Monte Carlo evidence demonstrates that the estimator can perform well in moderately sized samples. As an application, we study entry decisions by construction contractors to bid on highway projects in California. We find that an equilibrium is more likely to be observed if it maximizes joint profits, has a higher Nash product, uses mixed strategies, and is not Pareto dominated by another equilibrium. National Science Foundation (U.S.) (Grant SES-0339328) National Science Foundation (U.S.) (Grant SES-0452143) 2011-06-27T15:16:08Z 2011-06-27T15:16:08Z 2010-09 2009-08 Article http://purl.org/eprint/type/JournalArticle 0012-9682 1468-0262 http://hdl.handle.net/1721.1/64678 Bajari, Patrick, Han Hong, and Stephen P. Ryan. “Identification and Estimation of a Discrete Game of Complete Information.” Econometrica 78.5 (2010) : 1529-1568. © 2010 The Econometric Society en_US http://dx.doi.org/10.3982/ECTA5434 http://dx.doi.org/10.3982/ECTA5434 Econometrica Creative Commons Attribution-Noncommercial-Share Alike 3.0 http://creativecommons.org/licenses/by-nc-sa/3.0/ application/pdf Econometric Society / Wiley Prof. Ryan |
| spellingShingle | Bajari, Patrick Hong, Han Ryan, Stephen Identification and Estimation of a Discrete Game of Complete Information |
| title | Identification and Estimation of a Discrete Game of Complete Information |
| title_full | Identification and Estimation of a Discrete Game of Complete Information |
| title_fullStr | Identification and Estimation of a Discrete Game of Complete Information |
| title_full_unstemmed | Identification and Estimation of a Discrete Game of Complete Information |
| title_short | Identification and Estimation of a Discrete Game of Complete Information |
| title_sort | identification and estimation of a discrete game of complete information |
| url | http://hdl.handle.net/1721.1/64678 |
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