Nonparametric tests for strategic interaction effects with rationalizability

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Abstract

We introduce the first nonparametric tests for the presence and the sign of strategic interaction effects in discrete 2 × 2 games of complete information under the assumption of rationalizable behavior, which includes Nash Equilibrium as a special case but allows for incorrect beliefs. Our tests assume the existence of an observable covariate with a positive stochastic relationship with the payoffs of a particular player.

Original languageEnglish (US)
Pages (from-to)149-153
Number of pages5
JournalEconomics Letters
Volume181
DOIs
Publication statusPublished - Aug 1 2019

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All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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