SSE/EFI Working Paper Series in Economics and Finance
Probabilistic choice in games: properties of Rosenthal's t-solutions
Abstract: In t-solutions, quantal response equilibria based on the
linear probability model as introduced in R.W. Rosenthal (1989, Int. J.
Game Theory 18, 273-292), choice probabilities are related to the
determination of leveling taxes. The set of t-solutions coincides with the
set of Nash equilibria of a game with quadratic control costs. Increasing
the rationality of the players allows them to successively eliminate higher
levels of strictly dominated actions. Moreover, there exists a path of
t-solutions linking uniform randomization to Nash equilibrium.
Keywords: quantal response equilibrium; t-solutions; linear probability model; (follow links to similar papers)
JEL-Codes: C72; (follow links to similar papers)
15 pages, October 28, 2003, Revised December 20, 2003
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