Quantal Response Equilibrium presents a stochastic theory of games that unites probabilistic choice models developed in psychology and statistics with the Nash equilibrium approach of classical game theory. Nash equilibrium assumes precise and perfect decision making in games, but human behavior...

The authors present a simple classroom game in which students are randomly designated as employers, purple workers, or green workers. This environment may generate "statistical" discrimination if workers of one color tend not to invest because they anticipate lower opportunities in the labor...