Set identification in models with multiple equilibria

Alfred Galichon, Marc Henry

    Research output: Contribution to journalArticlepeer-review

    Abstract

    We propose a computationally feasible way of deriving the identified features of models with multiple equilibria in pure or mixed strategies. It is shown that in the case of Shapley regular normal form games, the identified set is characterized by the inclusion of the true data distribution within the core of a Choquet capacity, which is interpreted as the generalized likelihood of the model. In turn, this inclusion is characterized by a finite set of inequalities and efficient and easily implementable combinatorial methods are described to check them. In all normal form games, the identified set is characterized in terms of the value of a submodular or convex optimization program. Efficient algorithms are then given and compared to check inclusion of a parameter in this identified set. The latter are illustrated with family bargaining games and oligopoly entry games.

    Original languageEnglish (US)
    Article numberrdr008
    Pages (from-to)1264-1298
    Number of pages35
    JournalReview of Economic Studies
    Volume78
    Issue number4
    DOIs
    StatePublished - Oct 2011

    Keywords

    • Core determining classes
    • Identified set
    • Multiple equilibria
    • Optimal transport

    ASJC Scopus subject areas

    • Economics and Econometrics

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