We introduce empirical equilibrium, the prediction in a game that selects the Nash equilibria that can be approximated by a sequence of payoff-monotone distributions, a well-documented proxy for empirically plausible behavior. Then, we reevaluate implementation theory based on this equilibrium concept . We show that in a partnership dissolution environment with complete information, two popular auctions that are essentially equivalent for the Nash equilibrium prediction, can be expected to differ in fundamental ways when they are operated. Besides the direct policy implications, two general consequences follow. First, a mechanism designer may not be constrained by typical invariance properties. Second, a mechanism designer who does not account for the empirical plausibility of equilibria may inadvertently design implicitly biased mechanisms .
We introduce empirical equilibrium, a refinement of Nash equilibrium. In contrast to previous refinements in the literature, empirical equilibrium is based solely on observables and does not determine as implausible all weakly dominated behavior . We show that a distribution of play is an empirical equilibrium if and only if it is the limit of regular Quantal Response Equilibria associated with quantal responses that are utility maximizing in the limit. This result provides a direct link between the practice of experimental economics and our refinement .
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the prediction in a game that selects the Nash equilibria that can be approximated by a sequence of payoff-monotone distributions, a well-documented proxy for empirically plausible behavior. Then, we reevaluate implementation theory based on this equilibrium concept
a refinement of Nash equilibrium. In contrast to previous refinements in the literature, empirical equilibrium is based solely on observables and does not determine as implausible all weakly dominated behavior
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in a partnership dissolution environment with complete information, two popular auctions that are essentially equivalent for the Nash equilibrium prediction, can be expected to differ in fundamental ways when they are operated. Besides the direct policy implications, two general consequences follow. First, a mechanism designer may not be constrained by typical invariance properties. Second, a mechanism designer who does not account for the empirical plausibility of equilibria may inadvertently design implicitly biased mechanisms
a distribution of play is an empirical equilibrium if and only if it is the limit of regular Quantal Response Equilibria associated with quantal responses that are utility maximizing in the limit. This result provides a direct link between the practice of experimental economics and our refinement