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Order Statistic Games by Price Takers



?????????????????????????????????? ?????????????????????????????????????????? ?????????????????????????????????? ????????????????????????????????????????????????????????? ????????????????? ???? ??????????????????????????? ????????????????????? ??? ????????????????????????????????? ????? ORDER STATISTIC GAMES BY PRICE TAKERS� GNJ HD W6C< Department of Economics, Sogang University Seoul 121�742, Korea [email protected] 6C9 K6C<-O= Y>�� Department of Economics, Sogang University Seoul 121�742, Korea [email protected] Received February 2007; Accepted August 2007 Abstract This paper investigates the consequence of price-taking behavior in quantal response equilibrium model of order-statistic games. In contrast to the result of Yi (2003, Journal of Economic Behavior and Organization) that QRE selects the e$cient equilibrium, if players ignore the influences of their own choices on the game outcome, or behave as price takers, the selection depends entirely on the prespecified order-statistic and the number of players, and an ine$cient outcome could result. Keywords: Quantal Response Equilibrium, Coordination, Price-Taking Behavior JEL Classification number: C79, C92 I . Introduction Anderson, Goeree and Holt (2001) and Yi (2003) applied “quantal response equilibrium” (QRE) model to a class of coordination games, so-called order-statistic games, and showed that QRE produced a unique selection and had a potential to explain the associated experimen- tal results in Van Huyck et al.’s (1990, 1991, 2001). The present paper studies a consequence of price-taking behavior as a complement to the standard QRE model for a fuller explanation of Van Huyck et al.’s (2001) experimental result. In the order statistic games in Van Huyck et al. (2001) (VHBR), either five or seven � The authors thank the anonymous referee for the constructive comments and suggestions. The usual disclaimer applies. �� corresponding author Hitotsubashi Journal of Ec

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