arXiv 22 Oct 2025 · Econometrics
arXiv:2510.19140 · PDF · DOI · OpenAlex · Extracted main text
This paper develops a novel econometric framework for static discrete choice games with costly information acquisition. In traditional discrete games, players are assumed to perfectly know their own payoffs when making decisions, ignoring that information acquisition can be a strategic choice. In the proposed framework, I relax this assumption by allowing players to face uncertainty about their own payoffs and to optimally choose both the precision of information and their actions, balancing the expected payoffs from precise information against the information cost. The model provides a unified structure to analyze how information and strategic interactions jointly determine equilibrium outcomes. The model primitives are point identified, and the identification results are illustrated through Monte Carlo experiments. The empirical application of the U.S airline entry game shows that the low-cost carriers acquire less precise information about profits and incur lower information costs than other airlines, which is consistent with their business model that focuses on cost efficiency. The analysis highlights how differences in firms' information strategies can explain observed heterogeneity in market entry behavior and competition.
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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.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Aradillas-Lopez, A (2010) Semiparametric estimation of a simultaneous game with incomplete information | 1.000 | 9 | 3 | 100% |
| 2 | Ciliberto, F. and E. Tamer (2009) Market structure and multiple equilibria in airline markets | 1.000 | 7 | 4 | 100% |
| 3 | Tamer, E (2003) Incomplete simultaneous discrete response model with multiple equilibria | 1.000 | 7 | 3 | 100% |
| 4 | Bajari, P., H. Hong, J. Krainer, and D. Nekipelov (2010) Estimating static models of strategic interactions | 1.000 | 5 | 3 | 100% |
| 5 | Seim, K (2006) An empirical model of firm entry with endogenous product-type choices | 1.000 | 5 | 3 | 100% |
| 6 | Matejka, F. and A. McKay (2015) Rational inattention to discrete choices: A new foundation for the multinomial logit model | 0.874 | 11 | 2 | 100% |
| 7 | Bresnahan, T. F. and P. C. Reiss (1991) Empirical models of discrete games | 0.874 | 5 | 2 | 100% |
| 8 | Koh, P. S (2023) Stable outcomes and information in games: An empirical framework | 0.874 | 5 | 2 | 100% |
| 9 | Magnolfi, L. and C. Roncoroni (2022) Estimation of discrete games with weak assumptions on information | 0.874 | 5 | 2 | 100% |
| 10 | Yang, M (2015) Coordination with flexible information acquisition | 0.874 | 5 | 2 | 100% |
Showing the top 10 of 34 scored citations.