Unveiling the Logit Equilibrium: Shedding Light on Behavioral Anomalies
The article discusses how people's decisions in games can be influenced by factors like noise and costs. By using a logit probabilistic choice function, the researchers found that behavior in these games can be explained by a logit equilibrium. This equilibrium shows that players' beliefs match the decision distributions that arise from applying the logit rule to their expected payoffs. The researchers proved the existence of a unique, symmetric logit equilibrium and identified some key patterns in behavior. This study offers a new way to understand why people sometimes act differently than what traditional game theory predicts.