Trembling hand perfection for mixed quantal/best response equilibria

Abstract

The quantal response equilibrium (QRE) is a powerful alternative to full rationality equilibrium concepts. At a QRE, all joint moves have non-zero probability. However in “mixed scenarios”, where some players use quantal response and some use best response, equilibrium strategy profiles can have joint moves with zero probability. This raises the question of applying the trembling hand refinement to such mixed scenarios. To address this I first show how to reformulate the QRE as a “best response” equilibrium where expected utilities are replaced by more general objective functions. I then show that under this reformulation the two popular types of trembling hand perfection can differ when some players use quantal response and some use best response. I end by showing that one of those types of trembling hand perfection cannot be used to remove certain troubling kinds of equilibrium in such mixed scenarios, while the other type can. The conclusion is that only the one type of trembling hand perfection should be applied when we allow some players to be quantal response and some to be best response.