Working Papers by Charles A. Holt
# | Title | Authors | Date | Length | Paper | Abstract | |
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1459 | Bilateral Conflict: An Experimental Study of Strategic Effectiveness and Equilibrium | Holt, Charles A. Palfrey, Thomas R. | 01/17/2022 | 36 | sswp1459.pdf | Bilateral conflict involves an attacker with several alternative attack methods and a defender who can take various actions to better respond to different types of attack. These situations have wide applicability to political, legal, and economic disputes, but are particularly challenging to study empirically because the payoffs are unknown. Moreover, each party has an incentive to behave unpredictably, so theoretical predictions are stochastic. This paper reports results of an experiment where the details of the environment are tightly controlled. The results sharply contradict the Nash equilibrium predictions about how the two parties' choice frequencies change in response to the relative effectiveness of alternative attack strategies. In contrast, nonparametric quantal response equilibrium predictions match the observed treatment effects. Estimation of the experimentally controlled payoff parameters across treatments accurately recovers the true values of those parameters with the logit quantal response equilibrium model but not with the Nash equilibrium model. | |
1330 | A reverse auction for toxic assets | Armantier, Olivier Holt, Charles A. Plott, Charles R. | 08/10/2010 | sswp1330.pdf | |||
1219 | Regular Quantal Response Equilibrium | Goeree, Jacob K. Holt, Charles A. Palfrey, Thomas R. | 03/01/2005 | 29 pages | wp1219.pdf | The structural Quantal Response Equilibrium (QRE) generalizes the Nash equilibrium by augmenting payoffs with random elements that are not removed in some limit. This approach has been widely used both as a theoretical framework to study comparative statics of games and as an econometric framework to analyze experimental and field data. The framework of structural QRE is flexible: it can be applied to arbitrary finite games and incorporate very general error structures. Restrictions on the error structure are needed, however, to place testable restrictions on the data (Haile et al., 2004). This paper proposes a reduced-form approach, based on quantal response functions that replace the best-response functions underlying the Nash equilibrium. We define a {\em regular} QRE as a fixed point of quantal response functions that satisfies four axioms: continuity, interiority, responsiveness, and monotonicity. We show that these conditions are not vacuous and demonstrate with an example that they imply economically sensible restrictions on data consistent with laboratory observations. The reduced-form approach allows for a richer set of regular quantal response functions, which has proven useful for estimation purposes. | |
1203 | Regular quantal response equilibrium | Goeree, Jacob K. Holt, Charles A. Palfrey, Thomas R. | 06/01/2004 | 20 pages | sswp1203c.pdf | ||
1073 | Quantal Response Equilibrium and Overbidding in Private-value Auctions | Palfrey, Thomas R. Goeree, Jacob K. Holt, Charles A. | 02/01/2000 | sswp1073c.pdf |