Scandinavian Working Papers in Economics

HERO Online Working Paper Series,
University of Oslo, Health Economics Research Programme

No 2020:5: Equilibria in Logit Models of Social Interaction and Quantal Response Equilibrium

John K. Dagsvik ()
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John K. Dagsvik: Department of Health Management and Health Economics, Postal: HERO / Department of Health Management and Health Economics, P.O. Box 1089 Blindern, NO-0317 Oslo, Norway

Abstract: This paper investigates the set of equilibria in models of social interaction and Quantal Response Equilibrium (QRE). First, we discuss how models of social interaction can be viewed as a special case of QRE. Subsequently, we establish criteria that characterize the set of equilibria in models of social interaction and QRE. Finally, we establish conditions for convergence of sequential stochastic game models to QRE when players learn about the aggregate behavior of the players.

Keywords: Random utility models; Behavioral game theory; Social interaction; Quantal Response Equilibrium

JEL-codes: C02; C25; C62; C72; C73

17 pages, October 6, 2020

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