Identification of Firms' Beliefs in Structural Models of Market Competition Tue., November 03, 2020 | 1:30 PM — 1:30 PM Zoom Webinar 1307 E. 60th Street Chicago, IL 60637 United States Sponsored By: Center for Economics of Human Development Lifecycle Working Group Lecture Series Abstract: Firms make decisions under uncertainty and di§er in their ability to collect and process information. As a result, in changing environments, firms have heterogeneous beliefs on the behavior of other firms. This heterogeneity in beliefs can have important implications on market outcomes, efficiency, and welfare. This paper studies the identification of firms' beliefs using their observed actions - a revealed preference and beliefs approach. I consider a general structural model of market competition where firms have incomplete information and their beliefs and profits are nonparametric functions of decisions and state variables. Beliefs may be out of equilibrium. The framework applies both to continuous and discrete choice games and includes as particular cases models of competition in prices or quantities, auction models, entry games, and dynamic games of investment decisions. I focus on identification results that exploit an exclusion restriction that naturally appears in models of competition: an observable variable that affects a firms' cost (or revenue) but does not have a direct effect on other firms' profits. I present identification results under three scenarios - common in empirical IO - on the data available to the researcher. RSVP Recent News Alumni Profile: Santiago Hoyos, MPP’21, Pearson Fellow Tue., June 28, 2022 Harris Public Policy Selects 2022-2023 Common Read Fri., June 24, 2022 More news
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