Identification of Potential Games and Demand Models for Bundles
This paper studies nonparametric identification in binary choice games of complete information. We allow for correlated unobservables across players. We propose conditions under which the binary choice game is a so-called potential game and impose that the selected equilibrium maximizes its associated potential function. Our framework is formally equivalent to a multinomial choice demand model where a consumer can elect to purchase any bundle of products. We present a separate identification result for two-player games that does not rely on equilibrium selection.
Thanks to Tilman Borgers and Stephan Lauermann for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.