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A Decomposition Approach to Counterfactual Analysis in Game-Theoretic Models

Nathan Canen, Kyungchul Song

arXiv 17 Oct 2020 · Econometrics · 4 citations (OpenAlex)

arXiv:2010.08868 · PDF · DOI · OpenAlex · Extracted main text

Abstract

Decomposition methods are often used for producing counterfactual predictions in non-strategic settings. When the outcome of interest arises from a game-theoretic setting where agents are better off by deviating from their strategies after a new policy, such predictions, despite their practical simplicity, are hard to justify. We present conditions in Bayesian games under which the decomposition-based predictions coincide with the equilibrium-based ones. In many games, such coincidence follows from an invariance condition for equilibrium selection rules. To illustrate our message, we revisit an empirical analysis in Ciliberto and Tamer (2009) on firms' entry decisions in the airline industry.

Citation extraction

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Jia (2008) What Happens When Wal-Mart Comes to Town: an Empirical Analysis of the Discount Retailing Industry0.693111100%
2Tenn and Wendling (2014) Entry Threats and Pricing in the Generic Drug Industry0.69351100%
3Ciliberto and Tamer (2009) Market Structure and Multiple Equilibria in Airline Markets0.66727189%
4Goolsbee and Syverson (2008) How do Incumbents Respond to the Threat of Entry? Evidence from the Major Airlines0.6638188%
5Magnolfi and Roncoroni (2022) Estimation of Discrete Games with Weak Assumptions on Information0.6526183%
6Grieco (2014) Discrete Games with Flexible Information Structures: An Application to Local Grocery Markets0.64441100%
7Haile and Tamer (2003) Inference with an Incomplete Model of English Auctions0.64441100%
8Bergemann and Morris (2016) Bayes Correlated Equilibrium and the Comparison of Information Structures in Games0.6066167%
9Aguirregabiria and Mira (2010) Dynamic Discrete Choice Structural Models: A Survey0.58531100%
10Bajari, Hong, and Ryan (2010) Identification and Estimation of a Discrete Game of Complete Information0.58531100%

Showing the top 10 of 71 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Robust Network Targeting with Multiple Nash Equilibria0.64422
2Identification and Estimation of Dynamic Games with Unknown Information Structure0.40511