The Empirical Content of Models with Multiple Equilibria

Abstract

We consider a generic environment with (potentially) multiple equilibria and analyze conditions for identification of the structural parameters. We then study conditions that allow for the estimation of both the structural parameters and the “selected equilibriumâ€. We focus on a “easy to compute†consistent 2-step estimator and use Monte Carlo methods on a model with social interactions to describe its finite sample propertiesmultiple equilibria, identification, structural estimation, montecarlo simulations