Predicting strategic medical choices: An application of a quantal response equilibrium choice model

Quantal response equilibrium choice (QREC) models are structural behavioral models that account for bounded rationality and strategic interactions in analyses of games where each player’s payoff is a vector. We revisit the question of how market competition affects pro-social behavior and fit a QREC model to data from an incentivized laboratory experiment, where participants make decisions on medical treatments for abstract patients in monopoly, duopoly, and quadropoly games. Our results demonstrate that competition can cause substantial behavioral responses without any changes in pro-social preferences if one allows for the possibility that competition influences the degree of randomness in decision making.