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Econometric analysis of games with multiple equilibria

Authors: Áureo de Paula
Date: 01 October 2012
Type: cemmap Working Paper, CWP29/12
DOI: 10.1920/wp.cem.2012.2912

Abstract

This article reviews the recent literature on the econometric analysis of games where multiple solutions are possible. Multiplicity does not necessarily preclude the estimation of a particular model (and in certain cases even improves its identification), but ignoring it can lead to misspecifications. The survey starts with a general characterisation of structural models that highlights how multiplicity affects the classical paradigm. Because the information structure is an important guide to identification and estimation strategies, I discuss games of complete and incomplete information separately. Whereas many of the techniques discussed in the article can be transported across different information environments, some of them are specific to particular models. I also survey models of social interactions in a different section. I close with a brief discussion of post-estimation issues and research prospects.

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Áureo de Paula August 2013, Econometric analysis of games with multiple equilibria, Journal Article, Annual Reviews

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