The effects of payoff magnitude and heterogeneity on behavior in 2x2 games with unique mixed strategy equilibria

The Logit version of Quantal Response Equilibrium (QRE) predicts that equilibrium behavior in games will vary systematically with payoff magnitudes, if all other factors an held constant (including the Nash equilibria of the game). We explore this in the context of a set of asymmetric 2 x 2 games with unique totally mixed strategy equilibria. The data provide little support for the payoff magnitude predictions of the Logit Equilibrium model. We extend the theoretical QRE model to allow for heterogeneity, and find that the data fit the heterogeneous version of the theory significantly better. (C) 2000 Elsevier Science B.V. All rights reserved.