Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203603
Authors: 
Eibelshäuser, Steffen
Poensgen, David
Year of Publication: 
2019
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2019: 30 Jahre Mauerfall - Demokratie und Marktwirtschaft - Session: Economic Theory I No. F07-V1
Abstract: 
We formally define Markov quantal response equilibrium (QRE) and prove existence for all finite discounted dynamic stochastic games. The special case of logit Markov QRE constitutes a mapping from precision parameter ... to sets of logit Markov QRE. The limiting points of this correspondence are shown to be Markov perfect equilibria. Furthermore, the logit Markov QRE correspondence can be given a homotopy interpretation. We prove that for all games, this homotopy contains a branch connecting the unique solution at ...to a unique limiting Markov perfect equilibrium. This result can be leveraged both for the computation of Markov perfect equilibria, and also as a selection criterion.
Subjects: 
Homotopy continuation
Stationary equilibrium
Logit choice
JEL: 
C63
C73
Document Type: 
Conference Paper

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