Confronting the science of strategic interactions with data
Econometry and game theory
Article REF: AF1500 V1
Confronting the science of strategic interactions with data
Econometry and game theory

Author : Pascal BOUYAUX

Publication date: April 10, 2014 | Lire en français

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3. Confronting the science of strategic interactions with data

Non-cooperative game theory expresses the strategic rationality of a game's protagonists through the concept of Nash equilibrium. This concept generates clear-cut predictions as to the outcomes of games reflecting coordination problems encountered by economic agents: no error in the decision-making process analyzed is taken into account, either from the player's point of view or from that of the modeller. Strictly speaking, this means that if, in a particular context, we observe that a combination of selected strategies does not correspond to a Nash equilibrium, then we should reject this concept and therefore the underlying theory of rational behavior. However, since the publication of the seminal work

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