On the Empirical Content of Quantal Response Equilibrium
CFDP Revision Date
The quantal response equilibrium (QRE) notion of McKelvey and Palfrey (1995) has recently attracted considerable attention, due in part to its widely documented ability to rationalize observed behavior in games played by experimental subjects. However, even with strong a priori restrictions on unobservables, QRE imposes no falsiﬁable restrictions: it can rationalize any distribution of behavior in any normal form game. After demonstrating this, we discuss several approaches to testing QRE under additional maintained assumptions.
Haile, Philip A.; Hortaçsu, Ali; and Kosenok, Grigory, "On the Empirical Content of Quantal Response Equilibrium" (2003). Cowles Foundation Discussion Papers. 1706.