Multiplicity of Equilibria and Information Structures in Empirical Games: Challenges and Prospects
Published in Marketing Letters, 2015
This article discusses the challenge of equilibrium multiplicity in the estimation of empirical games, particularly in marketing. We outline the theoretical problem and its practical implications for empirical work, such as the difficulty in identifying model parameters and conducting counterfactuals. We review existing approaches for dealing with multiplicity and highlight their limitations. We also discuss the role of the analyst’s assumptions about the information structure and the equilibrium selection mechanism. Finally, we suggest promising avenues for future research, including the use of experimental data and the development of new econometric techniques to address this fundamental issue.
Recommended citation: Borkovsky, R., Ellickson, P., Gordon, B. R., Aguirregabiria, V., Gardete, P., Grieco, P., Gureckis, T., Ho, T. H., Mathevet, L. & Sweeting, A. (2015). "Multiplicity of Equilibria and Information Structures in Empirical Games: Challenges and Prospects." Marketing Letters. 26(2), 115-125.
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