SMU SOE Seminar Series (March 15, 2024, 4pm-5.30pm): Bayesian Inference on Counterfactuals in Games

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TOPIC:

BAYESIAN INFERENCE ON COUNTERFACTUALS IN GAMES

ABSTRACT We construct counterfactual predictive distributions for counterfactual analysis in structural models involving incompleteness (e.g., multiple equilibria and/or mixed strategies) and/or partial identification of model parameters. Our approach accommodates a range of outcomes of interest, including behavioral outcomes and welfare outcomes. Our approach also accommodates essentially any manipulation of the environment to generate the counterfactual analysis, including changes to the utility functions, changes to the distribution of the determinants of utility, changes to the number of decision makers, changes to the solution concept, and more. We take a Bayesian approach to summarizing the statistical uncertainty, and prove that our counterfactual predictive distributions are consistent if the posterior distribution for the underlying model parameter is consistent. In that way, our results can be flexibly used to conduct a counterfactual analysis after a preliminary step of identifying/estimating the utility parameters, from the previous literature. Our proof strategy is sufficiently general that it could be easily adapted to similar settings where a partially identified parameter is mapped to some other object of interest. We examine the numerical properties of our procedures in a set of Monte Carlo experiments. We also apply our methods to data on airline entry. Click here to view the CV.
		PRESENTER Elie Tamer Harvard University
		RESEARCH FIELDS Econometrics Empirical Industrial Organization
		DATE: 15 March 2024 (Friday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903

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