A Dynamic Homotopy Interpretation of the Logistic Quantal Response Equilibrium Correspondence

Theodore L. Turocy
Department of Economics
Texas A&M University
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Abstract

This paper uses properties of the logistic quantal response equilibrium correspondence to compute Nash equilibria in finite games. It is shown that branches of the correspondence may be numerically traversed efficiently and securely. The method can be implemented on a multicomputer, allowing for application to large games. The path followed by the method has an interpretation analogous to Harsanyi and Selten's Tracing Procedure. As an application, it is shown that the principal branch of any quantal response equilibrium correspondence satisfying a monotonicity property converges to the risk-dominant equilibrium in 2x2 games.

Version history

Current version dated February 25, 2004. Available in: [pdf]. This is forthcoming in Games and Economic Behavior.
This revision contains only expositional changes from the previous verson posted here in October 2003.
This paper was originally presented under the title "Computing the Logistic Quantal Response Equilibrium Correspondence"

Software

The algorithm described in this paper has been implemented as the QreSolve algorithm in Gambit.