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Title:Ambiguous act equilibria PDF Logo
Authors:Bade, Sophie
Issue Date:2010
Series/Report no.:Preprints of the Max Planck Institute for Research on Collective Goods 2010,09
Abstract:A game-theoretic framework that allows for explicitly randomized strategies is used to study the e ect of ambiguity aversion on equilibrium outcomes. The notions of 'independent strategies' as well as of 'common priors' are amended to render them applicable to games in which players lack probabilistic sophistication. Within this framework the equilibrium predictions of two player games with ambiguity averse and with ambiguity neutral players are observationally equivalent. This equivalence result does not extend to the case of games with more than two players. A translation of the concept of equilibrium in beliefs to the context of ambiguity aversion yields substantially di erent predictions even for the case with just two players.
Subjects:Uncertainty Aversion
Nash Equilibrium
Ambiguity
JEL:C72
D81
Document Type:Working Paper
Appears in Collections:Preprints of the Max Planck Institute for Research on Collective Goods

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