Relaxing the symmetry assumption in participation games: a specification test for cluster-heterogeneity

Abstract

We propose a novel approach to check whether individual behaviour in binary-choice participation games is consistent with the restrictions imposed by symmetric models. This approach allows in particular an assessment of how much cluster-heterogeneity a symmetric model can tolerate to remain consistent with its behavioural restrictions. We assess our approach with data from market-entry experiments which we analyse through the lens of ‘Exploration versus Exploration’ (EvE, which is equivalent to Logit-QRE) or of Impulse Balance Equilibrium (IBE).